For his part, British Foreign Secretary Jack Straw said the resignation was a serious development and regretted the divisions within the Palestinian Authority that led to it.

"The situation is grave," Straw told reporters on the margins of the E.U. meeting in Italy.

"It doesn't put the peace process back to square one. It is our responsibility to do everything we can to keep that process - however fragile - it is, as far as possible intact. But it is a further difficulty, a huge tragedy, that the Palestinians should be so divided."

Efforts To Change Abbas' Mind

Earlier Saturday, Abbas submitted his resignation to Arafat, with whom he has been locked in a power struggle, notably over the control of security services.

Sources close to Arafat said he had accepted Abbas' resignation, but Jibril Rajub, Arafat's security adviser, later said the Palestinian leader was still considering the premier's letter and had "not yet made up his mind."

Faruq Qaddumi, head of the Palestine Liberation Organization's (PLO) political office, said efforts would be made to convince Abbas to withdraw his resignation.

"If Abu Mazen (Abbas) maintains his decision, efforts will be made in the Palestinian territories for him to withdraw it," Qaddumi told reporters in the Syrian capital, Damascus.

Qaddumi, who has been in Damascus since Thursday, earlier met with Syrian Foreign Minister Faruq al-Shara for talks on "developments in Iraq and the occupied Palestinian territories," the state news agency SANA said.

Qaddumi is a long-time opponent of Abbas and even his relations with Arafat have been strained since his rejection of the failed Oslo peace process with Israel.

Shara highlighted the "importance of boosting Palestinian national unity to end the occupation and achieve peace," SANA added.

Abbas Never Popular At Home

Abbas is a polished and moderate politician liked by Washington and Israel, but distrusted at home, according to AFP.

"Better known by his nom-de-guerre, Abu Mazen, a name taken from his first son who is no longer alive, Abbas is seen by his own people as America's man, it said in a Saturday report.

"But after months of bitter wrangling with Arafat over full control of the Palestinian security apparatus, he finally played his trump card and tendered his resignation.

"His decision to quit is likely to force Arafat into a corner. Both Israel and the United States refuse to deal with the veteran Palestinian leader and as the peace process flounders, Arafat may be hard pressed to accept his departure.

Washington played a crucial role in forcing him firstly to create the post of prime minister, and secondly to name his old companion in arms to the post.

"A party man who traditionally shunned the spotlight, Abbas, 68, has been the Secretary General of the PLO since 1969, the number two after Arafat.

"In that role, he was long considered as a faithful lieutenant - until Arafat, treating him as a potential rival, spurned Abu Mazen when his name was first mooted as a possible Prime Minister.

"Abbas has one quality prized above all others by the Americans and the Israelis: that of being in some respects the opposite of Arafat."