WASHINGTON (AP) - Under pressure to curb Middle East violence, President Bush urged Israel on yesterday to pull its troops back from Palestinian cities and dismissed Palestinian leader Yasser Arafat as a failed leader who "betrayed the hopes of his people." He ordered Secretary of State Colin Powell to the region next week seeking a cease-fire.

With Powell standing at his side in the Rose Garden, Bush pressed Arab leaders to do more to end terrorism and emulate the peacemaking traditions begun by the late President Anwar Sadat of Egypt and King Hussein of Jordan and carried forward by their successors, Hosni Mubarak and King Abdullah.

"As Israel steps back, responsible Palestinian leaders and Israel's Arab neighbors must step forward and show the world that they are truly on the side of peace," Bush said. "The choice and the burden will be theirs."

As Bush spoke, Mubarak urged the administration to "exert its maximum effort" to secure an Israeli withdrawal. In an address to his nation, Mubarak said Israel's military campaign will create hatred among 300 million Arabs.

The Mideast crisis was sure to dominate Bush's weekend meeting with British Prime Minister Tony Blair at the president's ranch near Crawford, Texas.

The Israel-Palestinian bloodshed has put Bush under enormous political and diplomatic pressure to do something to stem the violence. He sought yesterday to spread blame and issue challenges evenly between the parties.

Arafat and his Cabinet issued a statement early today unconditionally accepting the renewed U.S. effort, but Cabinet minister Saeb Erekat rejected Bush's criticism of Arafat as "unjustified and unacceptable."

While invoking a "right to defend ourselves" against "this aggression against our people, against our towns, our refugee camps," the Cabinet statement said: "From our side, we are committed without conditions to the declaration of President Bush."

Israel's foreign ministry welcomed Powell's visit and promised "to do everything so that his mission will be successful." Defense Minister Binyamin Ben-Eliezer issued a separate statement offering cooperation in ending the violence but adding, "In the absence of a true willingness to do the same on the Palestinian side, Israel will continue in its actions to stop terror."

There was no immediate reaction from Israeli Prime Minister Ariel Sharon, although Sharon agreed to permit a U.S. envoy to meet with the besieged Arafat.

On Capitol Hill, Senate Majority Leader Tom Daschle (D-S.D) welcomed Bush's announcement, saying, "After months of violence, this initiative is rightly focused on results."

However, another Democrat, Rep. Anthony Weiner of New York, called Powell's visit "a bow to the bombers."

The violence has threatened to undercut Bush's anti-terrorism coalition and to delay any plans to move against Iraq or other nations accused of harboring terrorists.

Bush warned Syria and Iran against inciting more terrorism.

"To those who would try to use the current crisis as an opportunity to widen the conflict: Stay out," Bush said.

Senior administration officials said Bush decided that last week's suicide bombings coupled with Israel's strong military response compelled him to restate his public views and add to them.

The call for an Israeli retreat was a shift.

Just five days ago, he defended the storming of Arafat's compound, saying of the Israelis: "They're under attack." That same day, the administration backed a U.N. resolution calling on Israel to withdraw its troops.

Even as he sharpened his stance toward Israel, the president criticized Arafat on Thursday in harsher-than-usual terms. U.S. officials sent several signals that Bush's patience with Arafat may be running out.

With Arafat's headquarters under siege, Bush said, "The situation in which he finds himself today is largely of his own making.