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NEW YORK - The United Nation's Middle East envoy Terje Larsen launched a rare attack on Palestinian Authority Chairman Yasser Arafat and the failure of the Palestinians to implement reforms during a Tuesday meeting of the Security Council.

Larsen also criticized Israel for failing to remove illegal settlement outposts and freeze settlement building.

"The PA, despite consistent promises by its leadership, has made no progress on its core obligation to take immediate action on the ground to end violence and combat terror and to reform and reorganize the Palestinian Authority," Larsen said in his monthly report to the Security Council on the situation in the territories.

In what is considered a rare attack on the Arafat, Larsen said: "Regarding the crucial area of security reforms, the president of the PA has lent only nominal and partial support to the commendable Egyptian effort aimed at reforming the ailing Palestinian security services.

"All those who yearn for peace have already and repeatedly argued President Arafat, in public and in private, [must] take immediate action to restore this diminished credibility," Larsen said.

Quoting a report from Peace Now's settlement watch section claiming there are now 124 outposts in the West Bank, the UN envoy also came down on Israel's failure to remove outposts and halt construction in the West Bank.

"The Israeli government has made no progress either on its core obligation to immediately dismantle the settlement outposts created since March 2001 and to move towards a complete freeze of settlement activities," Larsen said.

Referring back to the Palestinian failure to implement reforms, Larsen said "Israel's lack of compliance on this sensitive issue of settlements is equally frustrating."