Palestinian leader Yasser Arafat has formed a smaller Cabinet as part of what Palestinian officials describe as a program of political reform. The move follows intense international pressure on Mr. Arafat to restructure the Palestinian Authority, which has been accused by Israel of failing to halt terror attacks against the Jewish State.

One month after the Palestinian parliament called for sweeping political changes, Mr. Arafat has reduced and consolidated his cabinet.

He named Abdel Razak Yehiyeh, a former guerrilla commander with the Palestine Liberation Organization, as interior minister, responsible for most of the operations of Palestinian security forces. Ultimate authority remains with Mr. Arafat.

The new Minister of Finance is Salam Fayyad, a former official with the International Monetary Fund.

The cabinet shakeup follows internal Palestinian criticism that the Palestinian Authority had become corrupt and too large. The changes also follow strong pressure from the United States and Israel for reform of the Palestinian Authority to help set the stage for a resumption of peace talks.

The moves were announced as Israeli Prime Minister Ariel Sharon arrived in Washington. He is to meet Monday with President Bush, and reform of the Palestinian Authority is likely to be one of the major topics for discussion.

Mr. Sharon has been calling for a major overhaul of Palestinian security forces, which he says have failed to halt terrorist attacks.

He says this has forced Israeli troops to enter Palestinian areas in a bid to halt the campaign of attacks, which have included numerous suicide bombings.