Signs showed the improvement of ailing Palestinian leader Yasser Arafat's condition as of early Thursday morning, while Israel continued its offensives in the occupied Palestinian territories.

Arafat's aide said that a decision on whether to transfer Arafat to hospital would be made in the next few hours.

"The Jordanian doctors have already arrived. We are waiting for the Egyptian doctors to arrive in a few hours. Together with the Palestinian doctors, they will discuss if he (Arafat) stays in Muqata (headquarters) or it is necessary to get him into the hospital," Nabil Abu-Rudeineh told Xinhua just outside the compoundin the West Bank city of Ramallah.

"The decision will come in a few hours," he said, adding that Arafat's condition was stable, and he was still fasting.

"Today, he allowed his consultants to see him. Now he is sleeping and not doing his duty," he said, adding the mayor of Nablus saw Arafat join prayers Thursday morning.

Meanwhile, one of Arafat's confidants said that the 75-year-old veteran leader has assured the Palestinian people and the world of his health.

"The president wants to tell the Palestinian people and the whole world that he is okay and there is no need to worry about him," Munib al-Masri, a businessman close to Arafat, told reportersafter a brief meeting with him at his West Bank headquarters.

Meanwhile, Hanan Ashrawi, Palestinian legislator, said that Arafat was in good health.

She said she was told that Arafat joined prayers in the morning and he had some cereal and milk. "People are a bit hopeful now that he's eating a bit."

Arafat, 75, reportedly lost consciousness late Wednesday evening, and a team of doctors were urgently summoned to his bedroom.

Arafat's health began deteriorating two weeks ago, but the causeof his illness has been unclear.

Palestinian officials said repeatedly that he was merely suffering a bout of flu, and a hospital official said on Tuesday that he was also suffering from a large gallstone.

Most people believed that his illness was exacerbated by conditions in Muqata, where Israel has prevented him from leaving for over two years.

Two of Arafat's doctors denied speculations that he has stomach cancer, saying a blood test and a biopsy of tissue taken from his digestive tract showed he does not have cancer.

Palestinian sources said that the Central Committee of the mainstream Fatah movement and the Palestine Liberation Organization's Executive Committee, both chaired by Arafat, were expected to meet at Arafat's headquarters later in the day.

For the Israeli side, Israeli Prime Minister Ariel Sharon spoke with his Palestinian counterpart Ahmed Qurei on Thursday and agreed in principle to permit Arafat to be flown abroad for medical treatment.

However, Qurei did not ask about whether Arafat would be allowedto return, said an Israeli official who asked not to be named.

However, Israeli security officials said that Arafat would be given permission to return to the West Bank, a move different from the siege policy aimed at sidelining Arafat.

"Israel will not impose any restriction on Arafat's movement foranything regarding the treatment he needs," Raanan Gissin, spokesman for Sharon, told CNN on Thursday.

"For us, it is a purely medical and humanitarian question. If the doctors think he heeds to be transferred to hospital and then returned, Israel will not impose any restrictions," he said.

Asked about whether a possible vacuum of power could lead to unrest, Gissin said that it was the internal affairs of the Palestinian side, but Israel would like to assist anyone who takes "the path of peace, not the path of terror."

However, Ashrawi, a famed female statesman, praised Arafat's merit in the Palestinian cause, saying that no single person was likely to take over for Arafat, either in the case of his death or in the short term, while he is recovering.

"President Arafat is a man who is, as we say, larger than life in many ways," she said. "I doubt there will be any one person who will be able to take (over) not just his symbolic stature, but his functions as well."

On the ground, a nine-year-old Palestinian girl was killed in Israeli tank shells on the southern Gaza Strip city of Khan Yunis, Palestinian security sources said on Thursday.

Meanwhile, Israeli troops, backed by about 50 tanks and armored vehicles, stormed the West Bank city of Jenin and the refugee camp of Jenin Wednesday night, leaving three Palestinians injured.