The State Department said Abbas was not covered by an immunity clause in a 1995 peace accord between Israel and the Palestinians and that US officials were now discussing how best to prosecute him, including his possible extradition to Italy.

Meanwhile, and the family of an American tourist killed during the 1985 hijacking of the Italian cruise liner Achille Lauro by Abbas' group said they want him pursued.

Deputy State Department spokesman Philip Reeker said the immunity clause the Palestinians were trying to invoke was moot as it bound only the Jewish state and the Palestinian Authority.

"The 1995 interim agreement concerns arrangements between Israel and the Palestinian Authority for the detention and prosecution of certain persons," he told reporters.

"The United States is not a party to that or any amnesty arrangements regarding Abu Abbas," Reeker said.

Earlier, another State Department official said the 1995 deal "does not apply to the legal status of persons detained in a third country."

Abbas, also known as Mohammed Abbas, is the mastermind of the 1985 ship hijacking was captured by US forces in southern Baghdad on Monday.

The Palestinian leadership has complained that his arrest is illegal under the 1995 accord and called for his immediate release.

That accord says members of the Palestine Liberation Organizationcannot be arrested or tried for acts committed before September 1993. Abbas' Palestine Liberation Front (PLF) is part of the PLO.

But the agreement, signed in Washington on September 28, 1995, is a bilateral Israeli-Palestinian accord and does not set out a US commitment to immunity for acts against US citizens.

A wheelchair-bound US tourist, Leon Klinghoffer, 69, was murdered and thrown into the Mediterranean during the Achille Lauro hijacking.

Israel has already rejected the Palestinian argument and Italy is seeking Abbas' extradition. Abbas was sentenced in absentia in Italy to five life terms in prison for his role in the hijacking.

Reeker said Washington was in discussions with Rome about the matter but declined to offer details.

"We are currently looking at a variety of options to ensure that he is brought to justice," he said. "The United States believes that all terrorists should be brought to justice."

The fugitive leader of the PLF was living in Iraq under the protection of now toppled Iraqi leader Saddam Hussein.

In April 1996, Abu Abbas signed up to the PLO charter which had dropped calls for the destruction of the state of Israel and from then on was allowed by Israel to visit the Palestinian territories for meetings of the Palestine National Council, the PLO's parliament in exile.

He said at the time that the Achille Lauro hijacking was "part of the past" and a "mistake".

Having jumped on the peace camp bandwagon, he said on several occasions he wanted peace, although in his most recent statements to the media in October 2000, at the start of the Palestinian uprising, he pledged to resume attacks on Israel.

However, Klinghoffer's daughters, want to see Abbas imprisoned for the crime.

"We have been waiting for this day for 17 years," Lisa Klinghoffer told NBC television. "We have worked a lot to see this day happen," added his other daughter Ilsa.

"I hope this sends that message out to future terrorists out there -- or people plotting and planning right now -- that they can't hide," said Lisa Klinghoffer.

The murdered man had been taking his wife on the cruise to mark their 36th wedding anniversary. His wife died four months after the hijacking.

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