Tired of reading about Palestinian suicide attacks on Israeli citizens, the Bush administration is raising the bar on Palestinian leader Yasser Arafat, telling him to do something about terrorism in his midst or risk losing America's diplomacy in the Arab-Israeli conflict.

Bush met with senior advisers Friday to talk about the Middle East and possible punitive actions against Arafat for his failure to curb violence and arrest militants attaking Israelis.

Sources said this is one of several meetings in which advisers will discuss a whole range of options, including severing all ties with Arafat, closing Palestinian Authority offices in Washington, suspending U.S. envoy Anthony Zinni's peacemaking mission, and putting Arafat's personal security force on the State Department's list of terrorist groups. 

Zinni is currently on hiatus from his peacekeeping efforts following an outbreak of violence last week.  No word on when he will return to the region.

Stepping up the pressure, Bush said Arafat has to do more to move the ball forward, in particular by preventing arms shipment like a recent 50 tons-weapons shipment to Palestinians intercepted by Israeli commandos in the Red Sea.

"I am disappointed in Yasser Arafat. He must make a full effort to rout out terror in the Middle East.  In order for peace, we must rout out terror, and ordering up weapons that were intercepted on boat, headed for that part of the world is not part of fighting terror. It's enhancing terror and obviously we are very disappointed," Bush said Friday while in Portland, Maine for a homeland security event.

The chief Palestinian representative in the United States called the criticism on Arafat unfair, "especially in light of the Israeli siege over the West Bank."

While laying the blame at Arafat's feet for the uncontrolled violence that has escalated in the past 16 months, the White House acknowledged that Arafat's movements are limited due to Israel's cornering him in the West Bank for close to two months, preventing him from traveling in the Middle East or to Europe to seek support for the Palestinian cause.

Still, White House spokesman Ari Fleischer said on Thursday, "The president understands the reason that Israel has taken the action that it takes."

It is unlikely that ties with Arafat will be cut altogether, said a senior administration official, since Bush is trying to keep together a coalition to fight terror that includes Arafat's Muslim neighbors and allies.

Actions do need to be taken against Arafat, the team agreed, but advisers are split on which steps to take, the official said. Arafat may be given one more chance to avoid punishment before any decision is made, a preference of Secretary of State Colin Powell.

"We continue to give a strong message to Chairman Arafat that he must act and we continue to review our policy with respect to the Palestinian Authority and Chairman Arafat, and I expect I'll be speaking to him again in the future to see what he's able to do and and to see what progress can be made," Powell said during a press conference with Afghan's interim foreign minister.

Despite Powell's overture, the State Department has suspended its tradition of using even-handed speech to discuss attacks in the Middle East, often balancing criticism and compliments for each side's actions.

Thursday, State Department Spokesman Richard Boucher abandoned that practice when asked about Israeli tanks moving into Ramallah, Arafat's home base.

"We've always been against incursions. We feel they aren't helpful," he said, but added, "We understand Israel's need to take steps to ensure its security. We understand the need for Israel to take steps in self-defense."

The State Department has also toned down its criticism of Israel for targeting terror suspects for assassination. A senior U.S. official said earlier this week that if Arafat arrested terrorists and dismantled their cells, Israel would not have to go after the suspects.

Pressure on Arafat also is building on Capitol Hill, where dozens of congressional members have just returned from trips to the region to measure the violence. Congress may decide to close the Palestinian office in Washington, an option already being studied by the White House and State Department.

A decision on the Palestinian office depends largely on what Arafat does about combating terrorism, a senior U.S. official said Thursday. It also would not be the first time the United States shut down diplomatic contact with the Palestinians. President George H.W. Bush suspended ties in 1990 after a terror attack on Tel Aviv.

If the Americans should close Arafat's Washington office, Rahman said, it "would be like shooting their policy in the foot, especially at this very crucial stage of American efforts to try to bring Israel and the Palestinians back to the negotiating table."

Some experts agree. Richard Murphy, a fellow at the Council on Foreign Relations and former ambassador to Syria, said if the United States continues down its "slippery slope" of overwhelming support for Israel, it could lead to a civil war between Arafat's Palestinian supporters and opponents.

Edward Walker, a former assistant secretary of state and ambassador to Egypt, Israel and the United Arab Emirates, said supporting Arafat could be a wasted effort.

"We should be an ally of Arafat, but we cannot be if he is not going to do anything" about terrorism, said Walker, who heads the Middle East Institute. "He has his bunker mentality on. The Europeans are turning away from him, not having given him any money for months, and the Arab governments are turning away."

Bush plans to meet Feb. 7 with Ariel Sharon, the Israeli prime minister. It will be the fourth time in less than a year that Sharon has called on the president.

The Associated Press contributed to this report.