Israeli negotiator predicts Palestinian state

"Suffice it to say that Eran will not express himself in that exact way again," the spokesman said.

Eran made his original remarks in an interview with Reuters on Monday before heading into peace talks with the Palestinians in Eilat.

"The Palestinian state will be the outcome of negotiations," Eran said.

Barak has never publicly referred to a Palestinian "state," preferring instead to use the term "entity."

Palestinian Planning Minister Nabil Sha'ath welcomed Eran's remark on Palestinian statehood. Both the Americans and the Israelis have changed their attitudes toward a Palestinian state, Sha'ath said.

"It is progress...The Palestinian state is no longer a taboo. The Israelis, for example, dropped their objection to the use of the term 'Palestinian state' or 'Palestine' when we are talking."

"It needs to be made clear that a Palestinian state is the natural right of the Palestinian people," Palestinian Authority leader Yasser Arafat told reporters Monday.

Sha'ath said the difference between Israel's acceptance of the state and the Palestinian position is that Israel sees a state only as an outcome of the peace process. He said the Palestinians would accept this if they could be sure that the two sides would finish a deal by the Sept. 13 target date.

"But we don't like the state to be hostage to Israeli requirements," he stressed. "We are not so sure that the Israelis will come closer to our terms of references by September."