President Mahmoud Abbas said yesterday he expected Palestinian elections on January 25 to go ahead after he received assurances from Washington that Israel would allow voting in Arab East Jerusalem.
Israel, which objects to the participation of militant group Hamas, had said it may block voting in the city.
"Today I received American assurances that the campaigning and the elections will take place in Jerusalem," Mr Abbas told reporters in Gaza. "Upon these assurances, I say that the election will continue and it will be held on time."
Mr Abbas, who previously raised the possibility that the election could be delayed if Israel barred voting in Arab East Jerusalem, made his comments after speaking by telephone to US Secretary of State Condoleezza Rice.
US officials said Ms Rice told Mr Abbas that it was up to the Israelis and the Palestinians to work out how votes might be cast in Jerusalem. But State Department spokesman Sean McCormack said the US hoped and expected an "accommodation" on the issue to be reached.
Israeli Foreign Ministry spokesman Mark Regev also offered an upbeat assessment.
"We're hopeful that it's possible to reach agreement that will be good for all sides - agreements that will allow Palestinian residents of Jerusalem to vote in the upcoming elections and at the same time will not in any way give legitimacy to terrorist organisations," he said.
Earlier yesterday Israel's Internal Security Minister, Gideon Ezra, said Israel was allowing candidates in the Palestinian election to campaign in East Jerusalem as long as they did not belong to militant groups.
But Mr Ezra said Israel had not yet decided on whether voting would be allowed in East Jerusalem, a core demand by Palestinians who want it as capital of a future state.
"I absolutely reject that Jerusalem is excluded from the election campaign and the elections," Mr Abbas said.
Police barred Palestinian candidates from campaigning in the city last week, drawing a call by the US, patron of a peace "road map", for Israel to allow Jerusalem Palestinians access to the parliamentary ballot.