Earlier, Mr Arafat said: "The collective punishments, the refusal to withdraw from Hebron, and the Israeli army's reconquest of areas from which it had withdrawn are a declaration of war against the Palestinian people."
The aim of the surprise announcement of a referendum by Mr Peres, during a visit to Oman, appears to be to outmanoeuvre the right-wing opposition Likud party, by robbing it of its main issues.
Likud was expected to accuse Labour of planning to evacuate Israeli settlements in the occupied territories, divide Jerus-alem and allow the return of Palestinian refugees. Mr Peres will now be able to say that Israelis will have a chance to decide about these issues after the election on 29 May.
The exercise may be too blatant an electoral gambit. Yossi Sarid, leader of Meretz, the left- wing ally of Labour, said: "This move is intended to cynically blur all political lines and neutralise the campaign of any substantive discussion and choice."
Labour believes the promise to hold a referendum before withdrawing from the Golan heights, as part of a peace agreement with Syria, has succeeded in defusing the issue in the eyes of Israeli voters.
Mr Peres wants to do the same with the "final status" talks between Israel and the Palestinians, which are due to start on 4 May and end by 1999.
The announcement of the referendum is more bad news for Mr Arafat. But he has little choice, except to hope Mr Peres is re-elected. Binyamin Netanyahu, the leader of Likud, says he would not reverse the Oslo accords, but his interpretation of them would leave Palestinians with little more than municipal autonomy.
At the same time, the sealing off of the West Bank and Gaza - last weekend even handicapped children on an annual holiday outing were not being allowed out of Gaza - is infuriating Palestinians.
The Israeli human rights group B'Tselem in a report describes the suffering of the 2.3 million Palestinians in the occupied territories in the month since the last suicide bombing.
It says almost 1,000 people have been arrested by Israel and it fears "that many detainees are being tortured and abused during interrogations." It says at least eight Palestinians have died because they were prevented from reaching hospitals to get treatment.
B'Tselem also questions the effectiveness of measures such as the demolition of houses of Palestinian activists, saying that 400 houses have been bulldozed or blown up since the start of the intifada in 1987 without diminishing Palestinian radicalism. On the contrary, it says demolitions and the imposition of curfews on whole villages are likely to drive "increasingly desperate Palestinians to perpetrate violent acts against Israelis".
It notes that no action was taken against the family or home of Baruch Goldstein, the Israeli settler who killed 29 worshippers in a mosque in Hebron in 1994.
Israel has also closed nine educational and charitable institutions in the West Bank and in Arab east Jerusalem. Shlomo Dror, a spokesman for policy in the territories, said all nine were closed for "training the next generation of suicide bombers.
"In the worst case, we closed an orphanage, because we don't believe teachers have a right to indoctrinate their kids that suicide bombers are heroes that they should emulate."
In many cases, however, the Israeli actions, such as the arrest of 370 students from Bir Zeit university, appears aimed primarily at impressing on Israeli voters that the government is tough on security.
A danger for Mr Peres, however, is that the blockade will lead to another spate of suicide bombs, which might finally ruin his hopes of electoral victory.Reuse content