"When the time comes he will be expelled. The clock is already ticking," the official told AFP on condition of anonymity.

The Israeli security cabinet approved in principle Arafat's removal on September 11, two days after twin suicide attacks in Jerusalem and Tel Aviv, a decision which prompted outrage among Palestinians and international condemnation.

The official said that the international community, including Israel's arch ally the United States, had still not fully appreciated that Arafat was the main hurdle to peace in the region.

"The Americans and the Europeans do not understand yet that Yasser Arafat is an arch-terrorist and represents the principle obstacle to all negotiations ... but this will happen one day."

A group of peace activists have formed a human shield around Arafat's Ramallah headquarters in a bid to foil any move by the Israeli army.

Health Minister Dany Naveh said in the immediate aftermath of Saturday's attack that Israel should follow through with its removal decision.

But Education Minister Limor Livnat said Sunday that the Israeli should impose a "watertight closure" around Arafat's offices where he has been confined for some 22 months.

The source said that Israel would continue its operations against Palestinian armed groups "especially the Islamists, the ticking bombs and terrorist leaders."