Palestinian parliamentary speaker Mr Ahmed Korei has accepted the nomination as Palestinian prime minister.
Mr Korei (65), a former peace negotiator with Israel who has little political backing among ordinary Palestinians, had said he wanted to hold talks with various parties to see if peace is possible before accepting Mr Yasser Arafat's offer to replace Mr Mahmoud Abbas.
However this evening it appears Mr Korei haas agreed to take on the job at a time when US-backed peace plan for the Middle East teeters on the brink of collapse.
Earlier he said he would look for guarantees of support from the European Union and the United States.
"I'm not ready for failure. I want to see whether peace is possible or not," he said.
A European Union spokeswoman said this morning that Mr Korei is highly respected by the EU and can count on the 15-nation bloc's support. "He is a man who believes in peace with Israel and he has done a lot for that. Therefore he will get all support from the European Union," said Ms Cristina Gallach, spokeswoman for EU foreign policy chief Mr Javier Solana.
Mr Abbas, who had tried to bring in reforms, quit on Saturday, complaining his peacemaking efforts were being blocked by Mr Arafat and were not getting enough support from the United States and Israel.
Israeli officials said Mr Abbas's decision to quit was a blow to peace hopes and renewed calls for Mr Arafat's expulsion. Mr Arafat had appointed Mr Abbas in April under international pressure for reform.
Soon after Mr Arafat's decision to nominate Mr Korei, Israel carried out more missile strikes against Islamic militant groups. Helicopter gunships attacked the home of a member of Hamas's military wing, wounding 15 people, medical workers said.
The Israeli army said the building was used as a weapons arsenal and that ammunition and explosives blew up after the missiles hit.
Mr Korei's credentials as a highly regarded moderate and an architect of the 1993 interim Oslo peace accords with Israel could endear him to the United States and might raise hopes of salvaging a US-led peace plan.
The decision to appoint Mr Korei was approved by the Palestine Liberation Organization's Executive Committee and the Fatah faction; the next stage is for Mr Arafat to seek Mr Korei's acceptance.
The appointment of Mr Korei, could stabilise weeks of political confusion in the Palestinian Authority, which has heightened concern that the US-led "road map" leading to peace and a Palestinian state by 2005 may now be beyond saving.