A senior Palestinian official said Arafat had not died but his condition was gravely critical.
This was also confirmed by a French official in Paris as well as Palestinian Foreign Minister Nabil Shaath.
Arafat was very ill but his brain, heart and lungs were still functioning, Nabil Shaath said.
"He is very ill," Shaath said in Paris on Tuesday.
Later in the evening, a senior Palestinian official said an agreement on funeral arrangements to be made in the aftermath of Arafat's death was reached by Israeli and Palestinian officials.
Vital organs functioning
Arafat was admitted in the
French hospital on 29 October
His situation has deteriorated, especially since Monday night, Shaath said. "Having recognised the critical situation that President Arafat is in today, his brain, his heart and his lungs still function and he is alive."
Shaath also ruled out euthanasia for Arafat, saying it would be "unacceptable".
"I want to rule out any question of euthanasia" to bring Arafat's life to an end, he said.
Arafat's wife, Suha, also separately denied reports that the ailing leader had died.
This followed reports that cast doubts on the condition of Arafat following contradictory statements by two ministers in the Palestinian Authority on whether he was alive or dead.
In Ram Allah, members of the central committee of Fatah and the executive committee of the Palestinian Liberation Organisation (PLO) were summoned for an emergency meeting.
At the meeting, it was decided that Arafat, in the event of his death would be buried in Ram Allah.
Earlier on Tuesday, the French military hospital caring for the ailing leader announced his condition had taken a turn for the worse and that his coma had deepened.
The announcement came a few hours before a high-level Palestinian delegation led by Prime Minister Ahmad Quraya from Ram Allah visited Arafat at the hospital.
A high-level Palestinian team
visited the leader in hospital
"The state of health of Mr Arafat worsened during the night [on Monday]," Christian Estripeau, the chief doctor treating him, said outside Percy military hospital in a south-western suburb of Paris.
"The comatose state that led to his admission into intensive care is deeper this morning. That marks a significant step towards an evolution which cannot yet be determined," he said.
Estripeau spoke of a "reserved prognosis" for Arafat, a discreet phrase meaning a patient is close to death.
Aljazeera correspondent in Paris, Michele al-Keik, said Arafat may soon be declared clinically dead.
He said it was noteworthy that the leader's deterioration coincided with the Palestinian delegation's arrival in Paris and that it was the first announcement in the morning after the group's arrival.
The visit of the Palestinian delegation has been at the heart of a struggle between them and Arafat's wife, who has used strict privacy laws in France to exercise tight control over access to and news about her husband.
The confusion triggered by Suha Arafat's accusation against the Palestinian leadership of "trying to bury him alive" may be cleared on Tuesday evening, Aljazeera's correspondent said.
Suha has exercised strict control
on news about her husband
The struggle between the Palestinian leadership and the
woman Arafat married late in life has set off a series of
rumours about the reasons for her intransigence.
One concerns bank accounts she holds in France with
transfers totalling nine million euros ($11.5 million). She has
denied charges the funds were improperly diverted from
Palestinian coffers in recent years.
Asked about these charges, Barnier said bigger issues were
at stake and added: "I don't know what's true in all that."
Earlier, the delegation comprising Quraya and Shaath as well as acting Palestine Liberation Organisation (PLO) chief Mahmud Abbas, and parliamentary speaker Rawhi Fattuh arrived in Paris on Monday evening with the aim of determining for themselves the state of Arafat's health.
Before the visit to the hospital, the delegation met French Foreign Minister Michel Barnier.
The visiting delegation is also expected to discuss the technical and political procedures of Arafat's return to the Palestinian territory in case he dies, Aljazeera's correspondent reported
Arafat was airlifted from his headquarters in Ram Allah on 29 October and flown to Paris, where doctors are trying to diagnose a mysterious blood disorder.
His condition deteriorated suddenly last Wednesday when he slipped into a coma and was admitted to intensive care.