A string of protests at the authority's alleged corruption, including kidnappings of security officials, have forced the ageing leader grudgingly to cut the sprawling Palestinian security services from eight to three groups.

Palestinian Prime Minister Ahmed Qorei also manifested his concern at the breakdown of order by handing his resignation to Arafat last week.

The premier, like his predecessor Mahmud Abbas, has been battling Arafat for control of security and has vowed to maintain his resignation despite Arafat' call for him to reconsider and a Thursday offer to reshuffle the cabinet.

But the ongoing internal battle also reflects a much deeper confidence crisis between Palestinians, who are struggling to survive four years into the intifada with its economically devastating Israeli army closures and deadly raids, and their leadership.

Militants from the radical Al-Aqsa Martyrs Brigades, otherwise loyal to Arafat as they stem from his own Fatah movement, are leading the street protests.

Despite their claimed allegiance to Arafat as the symbol of the Palestinain struggle, they are supported by members of the preventive security services backed by the Palestinian leader's foe, Mohammed Dahlan.

The Brigades have fervently protested the appointment of Arafat's own cousin Musa at the head of Gaza general security service, branding him the epitome of corruption and demanding he step down at once.

"The problem does not lie in this or that government, nor in the personal worth of a minister. What is needed is a re-assessment of how decisions are made," said a Brigades member who also sits on Fatah's executive committee in Gaza.

"Arafat is involved in everything, he decides on whether laws are buried or frozen. A solution to the current crisis that would not take this abnormal situation into account is vowed to fail," Sufian Abu Zeid told AFP.

"We don't want him to step down or to be stripped of his prerogatives, but he must let the Palestinian Legislative Council (parliament) fully exert its power," he added.

A damning report compiled by MPs and calling for a new government to tackle the security crisis was endorsed by the parliament Wednesday.

Reuters adds: The European Union's top diplomat vowed on Friday that the EU would play a role in Middle East peacemaking "like it or not" despite Israel's rebuke for backing a UN resolution against its West Bank barrier.

The pledge by EU foreign policy chief Javier Solana followed talks on Thursday in which Prime Minister Ariel Sharon warned him there would be little chance of EU involvement in the peace process without a drastic change in the European position.

Rocky relations between Israel and the EU have hit a new low after the 25-nation bloc voted for a Palestinian-sponsored General Assembly resolution demanding that the Jewish state heed a World Court ruling calling on it to tear down the barrier.