The announcement came on the first day of cross-party talks in Ramallah in the West Bank, aimed at drawing a line under divisions between his Fatah movement and Hamas, which heads the government.
Abbas said on Thursday they had 10 days to agree on a common platform or he would submit to referendum a proposal from jailed faction leaders on how to end the Palestinian crisis.
Were Hamas to accept the document, it would entail an implicit recognition of Israel, although its charter calls for the destruction of Israel.
In an initial reaction from Hamas, its speaker of parliament, Aziz Dweik, said that "we accept the right of the Palestinian to determine their fate".
However, the movement's chief spokesman, Sami Abu Zuhri, said it was "premature" given that the factions had yet to address their differences at the talks.
Islamic Jihad, the most hawkish of the armed factions, dismissed Abbas's proposal out of hand. "We reject this referendum of the masses because it could wind up strategically hurting the Palestinian cause," Khaled el-Batsh, one of its leaders in Gaza, told AFP.
The statement by Abu Zuhri of Hamas said: "The proposal represents an attempt to apply pressure with the aim of imposing a certain vision and conditions on the dialogue."
Aljazeera quoted the statement as saying that presenting the referendum proposal before holding the dialogue was jumping to conclusions, and an attempt to put pressure. "This means that other parties will be forced to shoulder responsibility in case the dialogue failed."
Haniya in Gaza City took part in
the talks via videophone
Conducting a referendum would be bypassing the people's choice and the political programme adopted by Hamas after winning the election, the statement said.
Furthermore, focusing on a proposal put forth by Palestinian prisoners among many other proposals was an unacceptable exercise in favouritism, Abu Zuhri's statement said.
It also criticised the suggestion to restrict the dialogue to 10 days, noting that a whole year had elapsed after the Cairo declaration was endorsed but an item concerning the Palestine Liberation Organisation had not been implemented.
Later, speaking to Aljazeera, Abu Zuhri said: "The talk by President Abbas about the Palestine Liberation Organisation was not very becoming. The language Abbas used does not promote dialogue when the PLO is poised to be the sole representative of the Palestinian people.
"We should not be branded as opposed to the prisoners' document, which does have many positive aspects, with the exception of the points written about the PLO and international legitimacy."
The so-called national dialogue was called in the face of an increase in violence between Fatah and Hamas that has left 10 people dead since the beginning of the month.
Jibril al-Rajoub, a member of Fatah's Revolutionary Council and a former senior security official, strongly defended Abbas's proposal in an interview on Aljazeera on Thursday. "What we wanted is a unification of the political and resistance Palestinian objectives to reflect the people's will," he said.
"The prisoners have a right to express their opinions, based on their rich experience in Palestinian affairs. They are more mature and better qualified than some of our politicians who are linked to partisan interests and factions. The proposal could be valuable to all Palestinians."
As for the deadline set by Abbas for accepting the proposal, al-Rajoub said 10 days was sufficient time "for the Palestinian people are aware of their national objectives and will promptly resolve the matter. Establishing a Palestinian state and winning international legitimacy will help achieve our national goals".
Israel said it would authorise
arms delivery to Abbas's guards
He further said: "All Palestinians should be aware that the world is dominated by a single superpower, which creates an imbalance of power. This in turn requires that we deal with the issue in a manner consistent with the need for removing the Palestinian people's suffering, by establishing a Palestinian state."
A survey by the Ramallah-based Near East Consulting group has shown that 80% of Palestinians support the prisoners' agreement.
Mark Regev, the Israeli foreign ministry spokesman, called Abbas's proposal an "internal Palestinian matter", but said Israel was following its development closely.
"What must be remembered are the benchmarks of the international community, which calls upon Hamas to unequivocally recognise Israel's right to exist, to totally and completely renounce terrorism and violence and to commit to signed agreements in the Middle East peace process," he said.
Abbas also urged armed groups
to stop battling each other
At the Ramallah talks Abbas and Ismail Haniya, the Hamas prime minister, urged armed groups to stop turning their guns on each other.
But Abbas's peace ultimatum caught everyone off-guard.
"If not, I will submit the document to a referendum in 40 days," he said.
The initiative drawn up by the jailed faction leaders and made public on May 10 sets out ways to "preserve Palestinian unity".
The blueprint proposes that activities be "confined to the territories occupied in 1967" - which could signal an end to attacks inside Israel - and calls for the creation of a national unity government.
In other news, Israel said on Thursday it would authorise deliveries of light weapons and ammunition to security forces loyal to Abbas.
"[Defence minister Amir] Peretz has decided jointly with Prime Minister Ehud Olmert to authorise the transfer of light arms and ammunition to forces loyal to Abu Mazen [Abbas]," a defence ministry official told AFP.
"At issue are several hundred weapons imported from foreign countries which will be transferred under tight control by us. We will know exactly to whom and where they are being delivered."
Clashes in Gaza City on Thursday
left 12 Palestinians wounded
Abbas's spokesman, Nabil Abu Rudeina, however, said the "announcement made by the Israeli defence ministry is false", without specifying further.
Hamas has put its own rival paramilitary force on the streets of Gaza, where the two sides have engaged in deadly gun battles.
Even as the cross-party talks were being held on Thursday, 12 Palestinians were wounded in scattered clashes in Gaza City between Hamas paramilitaries and official security forces.
A day earlier, four Palestinians were shot dead during an Israeli raid in Ramallah that also resulted in the capture of an Islamic Jihad commander.