Arafat issued the statement on Wednesday. Hamas broke a ceasefire called for by groups resisting Israel's occupation after the Jewish state assassinated a top Hamas leader.
Earlier, Arafat said he was ready to take action against resistance groups if Israel halted attacks against them.
His pledge came as the Jewish state vowed to continue its policy of targeted assassinations. Arafat did not elaborate on the steps he was prepared to take but he said he would not risk a Palestinian civil war.
Palestinian Prime Minister, Mahmud Abbas, under US and Israeli pressure to dismantle groups fighting against Israel’s illegal occupation, has expressed fears of a civil war if there is a crackdown against resistance fighters.
Arafat’s comments came a day after Israeli missiles attacked a Palestinian refugee camp in the occupied Gaza Strip, in a failed attempt to assassinate two Hamas activists. An elderly civilian bystander was killed and dozens injured, including women and children.
Arafat's declaration jeopardises the Palestinian cause and increases Israeli attacks, top Hamas leader Abd al-Aziz al-Rantissi told Aljazeera.
He said Israeli Prime Minister, Ariel Sharon, would believe the Palestinians had surrendered, adding Hamas would not put down the resistance.
A defiant Israel pledged on Wednesday to continue its track-and-kill policy against Hamas, saying all activists are legitimate targets.
Palestinians of all ages protest
Meanwhile, Israeli soldiers opened fire on Palestinians in the occupied West Bank city of Ram Allah, injuring at least two people, said witnesses and medical sources.
The Israeli army sealed off the offices of the Popular Front for the Liberation of Palestine (PFLP).
Palestinians had gathered there to commemorate the second anniversary of Israel's killing of PFLP leader Abu Ali Mustafa, when occupation troops closed off the offices, sparking people to throw stones.
Israeli soldiers also shot dead a Palestinian youth at a checkpoint near the West Bank city of Bethlehem.
Occupation troops claimed he was running towards them with a knife. It could not be verified by independent sources.
Israeli tanks also invaded West Bank towns and cities overnight, capturing Palestinians suspected of involvement in resistance activities, reported our correspondent.
A total of 18 Palestinians were seized in the West Bank towns of Jenin and Jaba'a. The majority of them were members of Arafat's Fatah movement.
Another seven Hamas activists were captured in the city of Tulkaram. Israeli soldiers slapped a curfew on Hebron, Jenin and Nablus.
Israel's latest attacks left mainly
civilians injured or dead
On the diplomatic front, Abbas will hold crisis meetings later on Wednesday, in an effort to salvage the US-backed “road map”, aimed at ending the Palestinian-Israeli conflict.
The Palestinian Premier, struggling with veteran Arafat over control of the security apparatus, will hold a cabinet meeting in the Gaza Strip which a close aide said, “will focus on the issue of security... and what steps the government should take on the ground”.
Abbas’s office indicated he would try to meet various resistance factions, but stressed he would not see either Hamas or Islamic Jihad. The Prime Minister cut off ties with the groups after a Hamas member detonated a bomb in west Jerusalem on a bus, killing himself and 18 others.
But an official of Islamic Jihad, Khalid Al-Batash, offered to meet Abbas.
Israel insists there can be no progress on the “road map” unless Palestinian leaders crackdown on resistance groups. For their part, Hamas declared the blueprint dead after Israel killed one of its top leaders.