The United States on Saturday denied PLO Chairman Yasser Arafat a visa to address the U.N. General Assembly in New York, and a PLO official said the decision meant the Assembly session would have to be held elsewhere.

The State Department said Secretary of State George Shultz decided to deny Arafat a visa because the Palestine Liberation Organization chief condoned terrorist attacks on Americans.The decision brought protests from the Palestine Liberation Organization and American Arabs but was welcomed by Israel and American Jews.

Nasser Al-Kidwa, the PLO's deputy U.N. observer, told Reuters that if Arafat could not enter the United States, the General Assembly would have to meet elsewhere, possibly in Geneva in January, to debate the questions of Palestine and the Middle East.

"I believe the General Assembly cannot address the question of Palestine or the situation in the Middle East in the absence of the chairman," he said. "So a solution has to be found."

Arafat had wanted to go to U.N. headquarters in New York to address the Assembly on the first day of its annual debate on Palestine. Aides said he planned to ask the world body to seat a Palestinian state proclaimed in Algiers on Nov. 15 by the Palestinian parliament.

The State Department said Shultz withheld the visa because the United States had "convincing evidence that PLO elements have engaged in terrorism against Americans and others."

"Mr. Arafat, as chairman of the PLO, knows of, condones and lends support to such acts; he therefore is an accessory to such terrorism," Shultz's statement said.

An adviser to Arafat told reporters in Amman that the United States had made "a big mistake. Arafat is as much a terrorist as George Washington," Bassam Abu Sharif said. He added the PLO

would respond officially after studying the State Department statement.

"The battle is not over yet. The PLO has lots of friends at the U.N. We will follow the issue until justice is attained," Sharif said.

A senior U.N. official, who asked not to be named, said he believed the U.S. action would spark a strong protest supported by many member states. Another U.N. source said the organization would be almost bound to lodge a protest.

The United Nations had asked the State Department to facilitate the application, submitted to the U.S. consulate in Tunis on Friday along with the PLO chief's passport. PLO headquarters are in Tunis. But its granting was fiercely opposed by U.S. Jewish leaders as well as 51 U.S. senators.

Arafat addressed the United Nations in 1974, when he was spirited in and out in secrecy. After that visit, the PLO received U.N. observer status under which its representatives can speak in debates but not vote.

The 1947 Headquarters Agreement under which the United Nations was established in New York obliges the United States not to hinder people with legitimate business at the United Nations, but U.S. authorities insist this has always been qualified by a U.S. right to safeguard its own security.

A spokesman for Israel's Foreign Ministry said: "Of course there is satisfaction here. We made our position clear that we thought it was not fit for a man like Arafat to address the U.N. General Assembly."

Abraham Foxman, U.S. director of the Anti-Defamation League of B'nai B'rith, and Malcolm Hoenlein, executive director of the Conference of Presidents of Major American-Jewish Organizations, issued statements welcoming the visa denial as proof of U.S. resolve to fight international terrorism.

Ambassador Colvis Maksud of the League of Arab States told Reuters the U.S. decision "embarrasses the Arab friends of the United States." He urged that U.N. discussions on the issue be moved from New York to Geneva.

Mohammad Mehdi, president of the New York-based American-Arab Relations Committee, said: "We believe the State Department has succumbed to the Zionist pressure."

PLO "Foreign Minister" Farouk Kaddoumi told journalists this week that if the U.N. did not seat the new Palestinian state Arafat planned to ask it to freeze Israel's membership.

The PLO says the state proclaimed on Nov. 15 is based on the U.N. plan to partition the British mandate of Palestine in 1947, two states, one Arab and one Jewish. The Jewish state became Israel in 1948.

Earlier on Saturday, Arafat urged Western European heads of state to put pressure on the United States to recognize the rights of the Palestinian people.