The two Palestinians and other top leaders met into the early hours Thursday to discuss how best to respond to the attack, a blow to a U.S.-backed peace effort. Participants said the talks were tense and occasional erupted in yelling.
Israeli Prime Minister Ariel Sharon on Wednesday approved a series of pinpointed military strikes, some of which could begin immediately. A column of 13 Israeli tanks was seen lining up outside the West Bank town of Ramallah, where Arafat's headquarters is located. However, Israeli security officials indicated the compound would not be targeted, as it was in previous raids.
Five Americans were among those killed in Tuesday's attack on a Jerusalem bus, the U.S. Embassy said. The bus bombing Tuesday was the deadliest attack since President Bush unveiled his "road map" peace plan in May, and the tragedy was magnified by the fact that six children, ranging in age from 3 months to 15 years, were among the dead.
Secretary of State Colin Powell called Abbas and told him he expected "immediate measures to stop the deterioration," said Palestinian Information Minister Nabil Amr. It was not clear whether Powell issued an ultimatum.
CBS News Correspondent Tom Fenton says Abbas is trying to salvage the peace process.
Amr said Abbas ordered the detention of militants directly linked to the attack, but would not clamp down on militant groups without Arafat's backing
The Palestinian Cabinet meeting was still going long past midnight, with officials debating a proposed political statement "that can prevent internal Palestinian fighting and at the same time contain the Israeli anger" for the latest attack, Palestinian Labor Minister Ghassan Al-Khatib said.
Participants, speaking on condition of anonymity, said ministers made several proposals, including freezing militant groups' bank accounts and outlawing the military wings of Hamas and Islamic Jihad.
Several ministers said the prime minister said he would demand that all security services be united under his command, and suggested he might step down if Arafat balks.
Arafat, who has been accused by Israel of involvement in terror, continues to control several of the security branches. He has repeatedly criticized Abbas, saying his agreements with Israel amount to very little.
Palestinian security forces ordered the owners of three satellite uplink facilities to prevent Islamic Jihad or Hamas from giving media interviews, a Palestinian security source said.
Abbas' security chief, Mohammed Dahlan, arrived at the Cabinet meeting with a bulletproof vest under his blazer, the first time he was seen wearing such protection. It appeared to be an indication of growing tensions among Palestinians.
Abbas until now has shied away from confrontation with Hamas and Islamic Jihad, fearing it will spark violence between Palestinians. Instead he has tried to persuade them to halt attacks on Israelis. His decision on whether to change course could determine the fate of the "road map" plan.
Israel warned Wednesday it will resume a relentless hunt for terror suspects if Abbas does not take action, and new Israeli sweeps could trigger more Palestinian attacks. "Either they fight terror, or we do it, without compromise," said Israel's vice premier, Ehud Olmert.
For now, Israel is not planning a major military offensive, but instead will carry out several pinpoint raids against terror suspects, regardless of what the Palestinians decide, said an Israeli security official, speaking on condition of anonymity.
Hamas and Islamic Jihad, along with Arafat's Fatah, had declared a unilateral cease-fire on June 29, but then changed the terms, saying they would avenge killings of Palestinians by Israeli troops. Before Tuesday's attacks, Hamas and Fatah renegades carried out bombings, killing two Israelis.
The Jerusalem bombing came in revenge for the killing last week of an Islamic Jihad leader, Mohammed Sidr, in an army raid in the West Bank city of Hebron. The bomber was a 29-year-old mosque preacher from Hamas and a friend of Sidr's.
The bomber struck as a bus crowded with Jewish worshippers, including many families with children, made its way from the Western Wall, Judaism's holiest shrine, to an ultra-Orthodox neighborhood in Jerusalem.
The 100th suicide bombing during nearly three years of fighting was especially horrific because the packed bus carried many large families with children. Ambulances whisked away the wounded, separating children and parents.
Hospital staff were busy tracking down the parents of wounded children who were among the few dozen people still hospitalized Wednesday. Some of the missing mothers and fathers were dead, while others were being treated at other hospitals across the city.
At a Jerusalem hospital, infant Shira Cohen lay alone in a hospital bed Wednesday, looking tiny among blankets and machines, her face red and sliced by shrapnel. Doctors would have operated to try to save her left eye, but will probably have to remove it because it took hours to find her parents — injured at another hospital — to get permission.