Latest attack forces Bush to delay launch of blueprint for Palestinian state

President George Bush's much-heralded proposals for a Middle East peace were further delayed yesterday by the latest suicide bombing – adding to the growing sense of frustration and impotence within Washington.

The President had already postponed announcing his proposals because of Tuesday's suicide bombing, in which 20 people were killed. After the latest attack in Jerusalem's French Hill district, officials said an announcement at this time would be unlikely to have a positive impact.

A Palestinian minister, Ghassan al-Khatib, complained that the latest delay would only widen the "cycle of violence".

Mr Bush's spokesman, Ari Fleischer, said: "It's obvious that the immediate aftermath is not the right time. The President knows what he wants to say. The President will share it when ... it can do the most good. I think the time will be soon."

Officials said the President was still determined to make his announcement as soon as possible – no later than Monday. When he does, he is expected to propose an interim Palestinian administration and will then dispatch his Secretary of State, Colin Powell, to the region to press the plan on both sceptical parties.

But the interim Palestinian state, with provisional boundaries, would not come immediately. Mr Bush will say it should only be established after considerable Palestinian reforms he believes could take as much as a year to implement.

But a senior US official recognised that the administration was still debating the blueprint, saying: "Every time a suicide bombing takes place, the plan evolves in a direction the Palestinians don't like."

One senior American source involved in drafting Mr Bush's speech said he was likely to suggest a lengthy timetable for negotiating permanent borders, possibly as much as three years, by which time the current Palestinian leader, Yasser Arafat, was unlikely to wield such influence.

In addition to the difficulty of announcing his proposals in the aftermath of the Palestinian attack, Mr Bush has fierce divisions within his cabinet, with Mr Powell representing one end of the administration's Middle East thinking and the Vice-President, Dick Cheney, and the Defence Secretary, Donald Rumsfeld, the other.

As well as the interim state – a proposal that would almost certainly be rejected by the Palestinians and Israel – Mr Bush will call for an international peace conference. But chances of the peace conference taking place in September seemed to be evaporating last night. Its venue also remains uncertain, although Washington was mentioned in a recent draft. Mr Bush will also call for a reorganisation of the Palestinian Authority in an effort to encourage Palestinians other than Mr Arafat to be heard. He is unlikely to address the status of Jerusalem or the question of the right of return for refugees, though he is likely to ask Israel to stop building settlements in Palestinian areas.

Some of Mr Bush's advisers have been pushing for provisional statehood as soon as September, which could coincide with the peace conference.

However, one official said Washington had already been decided that this was too soon and said Mr Bush would seek to use the peace conference to build support for his plan rather than as a deadline.