With momentum toward a West Bank accord growing, President Clinton is considering ways to establish a formal U.S. relationship with the Palestinian Authority.

Clinton took up the matter with Yasser Arafat at the White House Tuesday as they discussed security and other key issues the president hopes can be settled by mid-October.His aim is an agreement to be announced at a summit here, and he is sending Secretary of State Madeleine Albright to the Middle East next week to try to finalize its terms.

Arafat, meanwhile, accepted Israel's formula for turning over more land on the West Bank and voiced hope that an agreement could be concluded at the three-way summit with Clinton and Israeli Prime Minister Benjamin Netanyahu.

"Peace is a Palestinian need, Israeli need, Arab need, international need," Arafat said after an hourlong meeting with Clinton.

The Palestinian leader assured Clinton that he would try to counter terrorism against Israel. "He will exert every possible effort," Palestinian negotiator Saeb Erekat said.

With momentum toward an accord growing, Clinton and Arafat "talked at some length about the arrangements that will exist when the United States can engage formally with the Palestinian Authority," White House spokesman Mike McCurry said.

The statement by McCurry suggested the Clinton administration could be preparing for Palestinian statehood, or at least upgrading U.S. dealings with the current authority, which Arafat sees as a precursor to a state.

The pullback would cover 13 percent of the West Bank, where Arafat wants to establish a Palestinian state, on top of the 27 percent Israel promised earlier to hand over to the Palestinian Authority.

Asked if an accord would be signed at the summit Clinton plans to hold here next month, the Palestinian leader said, "We hope so."

With the territorial issue basically resolved, the focus of U.S. mediation has shifted to whether Arafat can satisfy Netanyahu's demands to disrupt terrorist cells on Palestinian-held land, confiscate weapons from militant groups and have the Palestine Liberation Organization strike all anti-Israeli references from its covenant.