The Palestine Liberation Organization decision came on the third day of debate by its Central Council on whether to declare statehood May 4 -- the date that was originally envisaged as the end of the Oslo-negotiated five-year autonomy period.
The United States and the European Union had urged Palestinian leader Yasser Arafat to put off the declaration. They had feared that it would prompt countermeasures by Netanyahu and kill the ailing peace process.
In order to court Arafat, Western powers hinted that delayed declaration of independence would win widespread international recognition.
Netanyahu has made Arafat's initial pledge to declare statehood on May 4 a campaign issue.
The decision approved Thursday declares the current session of the Central Council open-ended and convenes another general meeting of all 124 members in June.
"We decided to give ourselves an open-ended session because we don't want to let any decision serve Netanyahu and the Israeli groups that are fighting peace," said Abdallah Frangi, the PLO's representative in Germany and a PCC member.
Some Palestinians had feared that a delay would play into the hands of hardliners, who would claim credit for thwarting Palestinian moves toward independence.
Arafat told the panel a delay was wise because he did not want to influence the Israeli election and disappoint the dozens of world leaders who had urged him to hold off on a statehood declaration, said a PCC delegate.
Arafat also reportedly said Palestinians should refrain from actions that might backfire.
Palestinian Planning Minister Nabil Shaath said the Palestinians retained all their options.
"This decision does not cancel a declaration of statehood. It's only a specified postponement, and the possibility of declaring a state stands," Shaath said.
The council also said it would take steps toward state-building, such as forming a committee that will start drafting a constitution. The committee is to be headed by Ismat Abdel Maguid, the secretary general of the Arab League.
The Clinton administration said it wanted negotiations for a final peace deal between Israel and the Palestinians completed within a year.
Meanwhile, in a TV campaign ad Wednesday night, Netanyahu told viewers that the Palestinian delay sgnaled a major diplomatic victory for him.
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