Jerusalem ? Yasser Arafat is considering the appointment of a prime minister to share the day-to-day running of government once a Palestinian state is declared, a senior Palestinian official told The Associated Press Wednesday.

The idea of shifting at least some executive powers to a prime minister was seen as a compromise that could provide a way out of the impasse created by the refusal of Israel and the United States to deal with Arafat directly. Last month, President Bush said Palestinians should choose new leaders “not compromised by terror.”

Arafat has denounced Bush’s call, but Palestinian Planning Minister Nabil Shaath said he was now willing to share executive power. Shaath said Arafat favored appointing a prime minister once presidential and parliamentary elections scheduled for January are held, and a Palestinian state is declared.

“He says in an independent state there needs to be a prime minister,” Shaath told AP. “The prime minister solves a lot of daily problems that the president should not address.”

Shaath said the beleaguered Palestinian leader, who for months has been largely confined by Israel to his battered compound in the West Bank town of Ramallah, signed a decree last week asking him to convene a team of legal experts and devise proposals on a prime minister and other constitutional issues.

Shaath, a former top peace negotiator who is considered a political moderate, is himself being considered as a candidate for the post of prime minister, according to Palestinian officials. He is a close Arafat aide and is likely to follow Arafat’s direction.

Although Arafat has not yet formally announced his candidacy for president, he is widely expected to run in the January vote, and no serious challenger has yet emerged. Arafat said this week he would be a candidate if it were approved by his Fatah movement and the PLO leadership.

Ranaan Gissin, spokesman for Israeli Prime Minister Ariel Sharon, said the idea of Arafat remaining as president was “acceptable” to Israel “as long as Arafat does not stand in the way of a significant change.”

But, “As long as Arafat controls the security apparatus and the money, there will be no change,” Gissin added.

A senior Bush administration official said Washington was aware of Arafat’s idea. “It’s out there,” said the official, speaking on condition of anonymity. “It’s one of the scenarios we’ve heard about.”

On Monday, Secretary of State Colin Powell told ABC’s “Nightline” that he would be “more than willing to consider” the prime minister idea.