Quraya said on Wednesday this was one of several proposals being weighed in response to US assurances to Israel that it could retain some West Bank settlements and that Palestinian refugees would not resettle in the Jewish state in a final peace treaty. 

"The resignation issue is one of the issues under discussion within the Palestinian Authority and the leadership," Quraya told Reuters at his office in the West Bank village of Abu Dis. 

"But until then, the government will continue to work normally," Quraya said.  

A mass resignation or cancellation of the prime minister's post would place full powers in President Yasir Arafat's hands, a move that may deteriorate US-Palestinian relations. 

Sidelining Arafat

The US had demanded the creation of the post of Palestinian prime minister to sideline Arafat whom it accuses of fomenting violence. Arafat denies the charge. 

"Some are proposing going to the international court to complain against Bush ... others want the United Nations General Assembly to meet and reiterate international resolutions"

Ghassan al-Khatib,
Palestinian Labour Minister

The Palestinians were infuriated by the assurances issued by US President George Bush last week which underpin Israeli Prime Minister Ariel Sharon's "disengagement plan" to withdraw from the Gaza Strip. 

Arafat and his cabinet have rejected the plan as a ruse to grab occupied West Bank land captured in the 1967 Middle East war. 

'Nothing decided yet'

Other Palestinian officials said the leadership was at a loss over how to respond to the new US position, which the Palestinians regard as a severe blow to the resumption of peace talks and to a just resolution to the decades-old conflict. 

"The option of dissolving the cabinet was suggested by many.
Some are proposing going to the International Court to complain against Bush ... others want the United Nations General Assembly to meet and reiterate international resolutions," Labour Minister Ghassan al-Khatib told Reuters. 

"But nothing has been decided yet," he added.