On Monday, the Palestinian Legislative Council elected Rafiq al-Natshah as the speaker, permanently replacing Quraya who served as speaker from 1996 until early October when Palestinian President Yasir Arafat appointed him as temporary prime minister.

The 30-day term of Quraya's caretaker government expires at midnight on Tuesday, but senior Palestinian officials said he was close to establishing a new government.

"Ahmad Quraya's cabinet is expected to take shape in the coming 48 hours," Arafat's spokesman Nabil Abu Rdainah told Reuters new agency.

But senior Palestinian officials speaking privately said there were some last-minute hitches because Arafat opposed the appointment of General Nasr Yusuf to the powerful post of
minister of interior with authority over the security forces.

Key position

The position is key to reining in resistance groups and paving the way towards implementation of a US-backed peace plan to end three years of violence.

Quraya is one step closer to the
formation of a new cabinet

Hasan Abu Libdah, the director of Quraya's office, said the prime minister wanted his interior minister to have strong security credentials as his first order of business was opening a dialogue with resistance groups to agree to a ceasefire.

The speaker is one of the most important positions in the Palestinian Authority because by law the speaker would become acting president if Arafat should die.

A recent bout of sickness led to rumours that Arafat was suffering from a fatal illness. His doctors said he had gallstones and might need minor surgery.