The Palestinian president, Mr Yasser Arafat, and prime minister-designate Mr Mahmud Abbas have agreed on a deal breaking a deadlock on forming a new cabinet.
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Mr Arafat: opposed to the appointment of Dahlan
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"Arafat and brother Abu Mazen (as Abbas is also known) have sorted out their differences," said Mr Tayeb Abdul-Rahim, a senior aide to Arafat, after last-minute mediation efforts by a senior Egyptian envoy.
He said that under the deal, Mr Abbas would serve as interior minister and Mr Mohammed Dahlan, the former Gaza security chief whom Mr Arafat did not want in any executive position, would be in charge of security affairs.
Mr Arafat has bitterly opposed the appointment of Mr Dahlan, but at the root of theconflict between him and Mr Abbas appeared to be his resistance to sharing power. Mr Dahlan is one of the few men believed to be willing and able to take on powerful armed groups which have turned the 30-month Palestinian uprising into a bloody low-level war.
ButMr Arafat has also been alarmed by the sudden international acceptance of Mr Abbas, an advocate of suspending anti-Israeli attacks, while Mr Arafat has been diplomatically isolated for more than a year.
Palestinian parliamentarians called on both men to make one last effort to find a way out of the impasse, which is threatening efforts to reform Mr Arafat's much-criticised administration and to implement a peace "roadmap" drafted by US, UN, EU and Russian diplomats to create a Palestinian state by 2005.
US President George W. Bush has said he will publish the plan once Mr Abbas is established at the head of a new government, and Washington hinted that anything short of that could endanger its release.
International attempts to encourage a last-minute breakthrough continued late yesterday with Arab League Secretary General Amr Mussa and Yemeni President Ali Abdullah Saleh both phoning Mr Arafat.
Earlier British Prime Minister Tony Blair called him, as well as the foreign ministers of Greece, Spain and Japan, to press him to relent.
US Secretary of State Colin Powell also raised his voice, backing Mr Abbas and slamming Mr Arafat, who Israel and the United States want dropped for allegedly abetting violence.
Agencies