Shocked by the resignation of Palestinian Prime Minister Mahmoud Abbas, the Bush administration said Saturday the Palestinians must find a new leader who stands apart from "a corrupt few tainted by terror" and will continue to seek peace based on a U.S.-backed blueprint.

The statement from press secretary Scott McClellan showed the administration is not weakening in its disdain for Yasser Arafat, the Palestinian Authority chief who created the prime minister's office this year to mollify the Americans and appointed Abbas.

Arafat told a gathering of legislators and Cabinet members in the West Bank city of Ramallah that Abbas, who submitted his resignation after losing a power struggle with Arafat, would head a caretaker government. Arafat had not accepted the resignation in writing.

McClellan's statement urged all involved, Israelis and Arabs alike, to tread carefully as the Palestinian government tries to fill its power vacuum.

"At this critical moment, it is important that all parties consider carefully the consequences of their actions," he said. "We remain committed to implementation of the road map, working with Israelis, Palestinians, Arab States who seek peace and our quartet partners."

The road map is President Bush's plan announced 14 months ago designed to create two states, Israel and independent Palestine, co-existing as neighbors in peace. The quartet refers to the U.S. co-sponsors: the United Nations, Russia and the European Union.

"We hope the Palestinian legislature will continue to act in a way that empowers the prime minister to fight terror and bring a better way of life to the Palestinian people," McClellan said.

"The creation of the office of prime minister was a key turning point for the Palestinian Authority in the development of new institutions to serve all the people, not just a corrupt few tainted by terror. The prime minister must be supported by a cabinet committed to fighting terror, political reform and rooting out corruption."

Bush orchestrated the appointment of Abbas, a longtime Arafat comrade and fellow founder of the Palestine Liberation Organization faction Fatah, as a way of shunting aside Arafat, who he said was tainted by corruption and a history of terrorism.

On its otherwise bleak Saturday, the administration got a measure of support from the European Union, whose foreign ministers designated Hamas a terror organization.

Richard Boucher, the State Department spokesman, welcomed the decision as an important act toward halting the financing of terrorism. "We look for the EU to carry through with the political decision it reached today and to take action against Hamas on an urgent basis," Boucher said. "This will send an important message that the violence and terror Hamas carries out does not represent the future for the Palestinian people and will not lead to a Palestinian state."

Until Saturday, the administration considered Abbas the only credible Palestinian peacemaker. Despite intense pressure from Israel and demands by the United States, however, Abbas had refused to try to dismantle Hamas and other violent Palestinian groups. Going beyond persuasion, he insisted, would lead to civil war.

Nonetheless, the administration has maintained a drumbeat of demands that the terror structure be dismantled. The road map also requires peacemaking steps by Israel, and Secretary of State Colin Powell appealed in a speech Friday for movement by both sides.

"It takes two to make peace; it takes only one to prevent peace," the secretary said. "If either of the parties turns away from its obligations under the road map, both will slide into a ditch or tumble over a cliff."

A senior State Department official, speaking on condition of anonymity, said Powell telephoned Javier Solana, the senior diplomat of the European Union, to discuss where the roadmap stands and how to move ahead. The officials said Hamas and Arafat are still the problems.

Abbas' decision to quit apparently caught the administration by surprise. As late as Friday, Powell insisted that progress was being made in implementing the road map. In a speech at George Washington University, Powell praised Abbas for trying to consolidate Palestinian security forces and curb corruption.

The administration and its road map partners were at a loss on how to keep alive the plan for establishing a Palestinian state by 2005 to exist side-by-side at peace with Israel.

A senior State Department official, Assistant Secretary John S. Wolf, shuttled between the region in getting instructions in Washington, trying to bolster Palestinian security to stop further attacks on Israel.

Deputy Secretary of State Richard Armitage tentatively was to visit the region this week, but it was unclear whether the weekend's events would affect his schedule.

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