Arafat's clarification came a day after Israeli Prime Minister Benjamin Netanyahu suspended Israel's troop withdrawal. The Israeli leader said he would not hand over 2 percent of the West Bank by the end of the week, as scheduled, until Arafat retracted threats to establish a Palestinian state in May and perhaps use force.
After reviewing Arafat's statement, Netanyahu adviser David Bar-Illan said Tuesday that the prime minister "considers this a retraction."
He said Arafat's remarks met all three of Israel's demands: "That only negotiations can bring about a final-status agreement, that there will be no resorting to 'any other way', which to us means that he is disavowing any use of violence or threats of violence. And lastly, there is a promise here to continue cooperating in the war against terrorism."
Bar-Illan said that Israel's cabinet would still have to decide Wednesday whether to give the go-ahead for the upcoming pullback.
Israel's parliament, meanwhile, gave approval to the peace accord Tuesday evening, at the end of a two-day debate.
The withdrawal, the first of three, was to have been carried out on Monday, but Israel has fallen behind schedule because of two suicide bombings by Islamic militants and a series of disputes and delays.
In all, Israel is to hand over 13 percent of the West Bank by the end of January, in exchange for a Palestinian campaign against Islamic militants.
The U.S. Mideast envoy, Dennis Ross, said earlier Tuesday he was confident the dispute would be settled soon. "Both sides have obligations, and both sides, I think, will fulfill their obligations," Ross said after talks with Israeli Trade Minister Natan Sharansky.
Arafat opened a news conference Tuesday with German President Roman Herzog in the West Bank town of Jericho by reading a statement concerning the dispute with the Israelis.
"I stress...that we are protective of the peace process in the Middle East and all the peace agreements we signed with the Israelis," Arafat said.
"Peace is a Palestinian strategic choice and any differences in the final status negotiations, we stress that we want them to be solved by peaceful means through negotiations, and not in any other way," Arafat said.
Arafat had issued a similar clarification Monday night. However, Tuesday he went a step further by appearing to be backing off plans to unilaterally declare statehood in May, at the end of the five-year autonomy period.
Israel and the Palestinians are to have completed negotiations on a permanent peace agreement by May, but with many difficult issues on the agenda, including final borders and the future of Jerusalem, it appears unlikely the deadline can be met.
Arafat also stressed in his statement that such an accord would be reached by peaceful means. In a speech Sunday to loyalists from his Fatah movement, he had alluded to the use of force, saying that "our rifle is ready" to take Jerusalem.
Despite the dispute, Israeli and Palestinian negotiators met Monday night, as scheduled, to try to conclude an agreement on setting up a land route for Palestinians between the West Bank and Gaza.
The head of the Palestinian delegation, Abdel Razek Yehiyeh, said he expected all issues to be settled by next week, and said the so-called "safe passage" between the enclosed Palestinian enclaves could be opened within a month.
Another committee dealing with the release of Palestinian prisoners was to meet Tuesday afternoon. Israel was to free a first group of 250 prisoners, out of a total of 750, by the weekend.
In the first pullback, 2 percent of the West Bank are to be transferred from sole Israeli control to joint jurisdiction, and 7.1 percent are to go from shared to sole Palestinian control.
Israel's government has not presented withdrawal maps. The Yediot Ahronot daily published its own map and said most of the land changing hands was in the northern West Bank, around the Palestinian towns of Jenin and Nablus.