Secretary-general of the Palestinian presidency, Tayib Abd al-Rahim, confirmed the death.
A spokesman for Percy military hospital had earlier said no decision had been taken to disconnect Arafat from artificial respirators.
A senior Muslim cleric who visited Arafat on Wednesday had ruled out disconnecting him from life-support machines.
Statements by Palestinian officials and medics have not mentioned the cause of the illness.
Aljazeera's correspondent in Paris said it seemed no one was permitted to give details on the cause or exact diagnosis of the illness.
Burial disputeMedia reports and speculation regarding the circumstances surrounding his funeral have increased.
Israel says that it will not allow Arafat to be buried in Jerusalem, his preferred resting place and a holy site for all Muslims.
Tayib Abd al-Rahim says the best
place for burial is in Ram Allah
Prime Minister Ariel Sharon and top Israeli cabinet members agreed on Wednesday to allow Arafat to be buried in the West Bank city of Ram Allah, Israel Radio said.
Palestinian authorities had previously suggested that the Ram Allah headquarters of Arafat might be the best place, according to Tayib Abd al-Rahim, secretary-general of the Palestinian presidency.
Freedom of movement
Discussions with Israel regarding funeral arrangements is a necessity since freedom of movement for all Palestinians including Arafat is restricted by Israel.
A Palestinian official said: "Arafat's life-long ambition was to make Jerusalem the capital of a Palestinian state, and his will was to be buried there."
Minister of Negotiation Affairs Saib Uraiqat pledged that Arafat's body would eventually be moved and reburied in east Jerusalem in the future.
"I think it [a burial in Ram Allah] will be temporary and one day, when we have peace and we are all right as neighbours, President Arafat's body will be moved to east Jerusalem, to al-Aqsa mosque," he told Israeli Radio.
Neighbouring Egypt has also been drawn into the controversy.
The country has welcomed the idea of holding a real or symbolic funeral for Palestinian President Yasir Arafat in Cairo, according to an announcement.
Egypt prefers Arafat to be buried in Jerusalem, to indicate that this city will remain the headquarters of the Palestinian State.
Egyptian Foreign Minister Ahmad Abu al-Ghait and intelligence chief Umar Sulayman will visit Israel and the Palestinian Authority on Friday to discuss the procedures of the burial and the future of the Palestinian Authority after the demise of Arafat.
Arab League assistance
Aljazeera's correspondent in Cairo reported that the Egyptians have said they will also try to prevent Israel from causing internal conflicts and from creating confusion among Palestinians.
Egypt's Abu al-Ghait (L) will meet
Palestinian and Israeli officials
Palestinian officials have said it is highly likely a funeral ceremony presided by the Arab League will be held in Cairo followed by a burial in Ram Allah in the West Bank.
"Egypt has offered for Arafat to lie in state in Cairo, but the Palestinian leadership will give the final decision today," Uraiqat said.
US President George Bush meanwhile has said that a new Palestinian leadership after the death of Arafat would improve chances for peace in the Middle East.
"There will be an opening for peace with new leaders in place," he said.
"When that happens, and I believe that it's going to happen ... the United States of America will be more than willing to help build the institutions for a free society to emerge so that the Palestinians can have their own state," he said.
"The vision is two states, a Palestinian state and Israel living side by side in peace. I think we have got a chance to do that. I look forward to being involved in the process".