Egyptian diplomat and intelligence official say postponement decision will be announced on Thursday.
Palestinian President Mahmoud Abbas has postponed planned parliamentary elections next month amid a dispute over voting in Israeli-annexed East Jerusalem and splits in his Fatah party.
Abbas, 85, blamed Israel for uncertainty about whether it would allow the legislative election to proceed in Jerusalem as well as in the occupied West Bank and Gaza on Friday.
The decision came three months after he announced the first national elections in 15 years in what was widely seen as a response to criticism of the democratic legitimacy of Palestinian institutions, including his own presidency.
The outcome of an election could see gains for Hamas, which controls Gaza.
Abbas’s chief domestic rival, Hamas had fought a well-organised campaign to defeat a similarly divided Fatah in 2006.
The dispute over Jerusalem was the principal reason cited by Abbas in a speech early on Friday following a meeting of Palestinian political factions.
“Facing this difficult situation, we decided to postpone the date of holding legislative elections until the participation of Jerusalem and its people is guaranteed,” Abbas said in the speech on Palestinian TV.
In previous elections, Israel allowed a few thousand Palestinians to vote in Israeli-controlled post offices in East Jerusalem. But this time, the Israelis said they do not have a government to approve the Palestinian request.
In an interview with Al Jazeera, political scientist Hasan Ayoub, however, rejected Israel’s reason saying that there are alternatives that would allow the voting to proceed, but Abbas is unwilling to press Israel on the matter.
The delay of the parliamentary elections set for May drew intense domestic criticism, with Abbas and his allies weakened by challengers from within his own divided Fatah party.
It was not immediately clear whether a presidential vote scheduled for July would go ahead.
The Palestinian Central Elections Commission said it was suspending the election process following Abbas’ decision. The election campaign was supposed to begin on Friday.
Protesters in Gaza and the West Bank called for the elections to proceed as scheduled – for many it would be their first election.
“As a young Palestinian citizen, I call for conducting elections, and I want my right to elect so I would see new faces, young faces, and see new political stances,” Wael Deys from Hebron told the Reuters news agency.
Another Palestinian voter told Al Jazeera that if the Palestinian Authority would have found a way to hold the elections if it wanted to.
Hamas criticised the reversal and described the decision as a “coup”.
“We reject this decision which violates the national consensus and Fatah movement bears responsibility for the consequences of this position,” spokesman Sami Abu Zuhri told Reuters.
Abbas had hinted at the delay for weeks by claiming that Israel had not agreed to permit East Jerusalem Palestinians to vote in the city.
A spokesman for Israeli Prime Minister Benjamin Netanyahu’s office said earlier this week that there had been no formal Israeli announcement on whether it would allow Palestinian voting in Jerusalem – as it did during the last elections in 2006 – and Israeli officials said on Thursday that there had been no change.
Internal divisions surfaced in Abbas’s Fatah party when jailed Fatah leader Marwan Barghouti and Nasser al-Qudwa – a nephew of the party’s late founder Yasser Arafat – announced a rival slate of candidates to run against Abbas’s official list.
Nevertheless, election preparations were well under way, with thousands of new voters and 36 party lists registered, showing what analysts say as Palestinians eagerness for new elections.
“The delay will cause a great disappointment among Palestinians, who most of them hoped it was time to end the divisions and bring about a change,” said Gaza analyst Talal Okal.
Abbas has been in power since 2005 and has ruled by decree for more than 10 years.
“Polls suggest that a majority of Palestinians think it is important to have elections. And people here think that the president is using Jerusalem as an excuse to delay holding them,” Al Jazeera’s Nida Ibrahim, reporting from Ramallah said.
The timing of his election announcement was seen as aimed at repairing ties with US President Joe Biden after they plummeted under his predecessor Donald Trump.
But analysts say that with the Israeli-Palestinian conflict low on Biden’s priority list, Washington prefers to avoid elections that could empower Hamas and anger Israel as US officials press ahead on nuclear talks with Iran.
Israel has been making it clear that it prefers an election delay, fearing its coordination with Abbas’s security forces in the West Bank would be undermined by the vote, said Shibley Telhami of the Brookings Institution.
“(To) the extent that Biden was prepared to confront Israel, his top priority has been the Iran nuclear deal,” Telhami said, adding that, among other factors, “this appeared to have weighed in on the Biden administration, with reduced enthusiasm for the election.”
State Department spokesman Ned Price said on Thursday: “The exercise of democratic elections is a matter for the Palestinian people and for the Palestinian leadership to determine.”