Secretary of State Colin Powell's postponed meeting with Yasser Arafat will take place Sunday since the Palestinian leader's statement against terrorism included "positive elements," State Department spokesman Richard Boucher said Saturday.

Powell will encourage Arafat to take "effective action" to end Palestinian attacks against Israel. Powell also is demanding restraint from Israeli forces on the West Bank.

He cited Arafat's condemning of all terrorist acts against Israel and Palestinian civilians; a strong condemnation of Friday's bombing in Jerusalem; a call to start immediate implementation of two U.S.-backed cease-fire plans; and peace proposals and "a reaffirmation of the Palestinian commitment to a negotiated peace."

Arafat's statement also expressed support for Powell's peacemaking mission, Boucher said, adding that Powell will press Arafat for action.

"In his meeting tomorrow, the secretary will work with Chairman Arafat and the Palestinian leadership to show leadership and to help make these statements a reality, with effective action to bring an end to terror and violence and an early resumption of a political process," Boucher said.

Earlier Saturday, Powell demanded restraint from Israeli forces on the West Bank.

In what appeared to be synchronized diplomacy, Powell said Israeli troops must "exercise the utmost restraint and discipline and refrain from "the excessive use of force." He singled out military operations in the town of Jenin, which said Palestinian and outside observers have condemned as heavy-handed.

"We are particularly concerned at the humanitarian situation" there, Powell said. Restraint is needed, he said, to "ensure `civilians are protected and to avoid worsening the already grave conditions inside Palestinian areas."

Arafat responded with the statement denouncing terrorism -- the kind sought by President Bush so Powell could go ahead with his postponed meeting with Arafat in Ramallah, where Israeli troops have confined the Arafat to his office.

Powell's initial plan to meet at Arafat headquarters Saturday was scrapped after the suicide bombing in Jerusalem that prompted fresh U.S. demands for Arafat to condemn terror.

Arafat's statement, in Arabic, was distributed by the Palestinian news service WAFA, giving it the circulation the Bush administration wanted.

The statement specifically condemned the Jerusalem bombing, which killed six people and injured scores.

"We are condemning strongly all the attacks which are targeting civilians from both sides and especially the attack that took place against Israeli citizens yesterday in Jerusalem," the statement said.

Earlier Saturday, Powell issued a statement calling on Israeli forces in the West Bank to "exercise the utmost restraint and discipline and refrain from the excessive use of force."

Israeli Prime Minister Ariel Sharon has ignored Bush's call for a swift withdrawal. Powell, too, has been unable to persuade Sharon to provide a timetable for removing troops from Palestinian cities and towns.

A top Arafat aide, Hassan Abdel Rahman, said in Washington that Arafat wanted to cooperate with Powell, but also needed to hear from the administration a condemnation of Israeli military's actions against Palestinian civilians. Palestinians allege many civilians have been killed in the Israeli operation to wipe out militant networks in the West Bank.

Israeli forces moved into more West Bank villages Saturday, and sporadic fighting continued, especially in Nablus where seven Israeli tanks began shelling the main local government complex.

Powell met with Christian religious leaders and aid workers while awaiting Arafat's response.

Rene Kosirnik, head of the Red Cross delegation to Israel, said Israeli forces on the West Bank were subjecting the Palestinian people to "collective punishment."

"The whole population should not suffer so much," he said after meeting with Powell.

Kosirnik singled out the refugee camps near Jenin, saying conditions were especially bad and that Israel was denying access to the Red Cross.

Richard Cook, West Bank field director for the U.N. Relief and Works Agency, said dead bodies were piling up.

Powell had come to Israel in hopes of ending the bloodshed with a cease-fire and he repeated declarations of his support for a Palestinian state. He said the Palestinians had to be given hope.

He has advised Israel that hunting down terrorists on the West Bank would not provide security, that only a settlement with Arafat would accomplish that.

Following his meeting with five officials of U.N. and Red Cross aid groups, Powell announced the United States will contribute an additional $30 million for the U.N. Relief and Works Agency on top of the $80 million already contributed annually.

Through the U.S. Agency for International Development, the administration is providing $62 million in assistance for health care, water system repairs and emergency food aid, Powell said.

"We call upon the international community to do all it can to help at this time of exceptional Palestinian need," he said.

The Associated Press contributed to this report.