At a conference on reform in London Mr Fayyad, a former IMF official, said he did not intend to take a position designed to be a curb on the powers of the Palestinian Authority chairman, Yassir Arafat.

“I’m not a candidate for this position,” Mr Fayyad, 50, said before the meeting between Palestinians, Israelis and international donors. “I’m a newcomer to the Palestinian Authority. There’s no doubt in my mind there are others who have been there in public service who are more suitable for the job.”

If Mr Fayyad holds to his commitment it would remove from the list of candidates a banker and technocrat of international repute who is the backbone of financial and political reforms demanded by Israel and the US.

Both countries have frozen out Mr Arafat, accusing him of failing to curb violence, corruption and incitement in both the Palestinian schools and institutions.

In response to renewed pressure, in part from a delegation of foreign envoys, Mr Arafat announced last week that he would appoint a Prime Minister.

The post is a key element in the road map toward a Palestinian state being drawn up by the quartet of international mediators — the United States, United Nations, European Union and Russia.

But, crucially, he failed to define exactly what powers the position would carry, gave no hint of who would be chosen or when the appointment would be made.

Critics in Israel and Washington said that demonstrated that Mr Arafat was once again intent on stalling when faced with anything likely to dilute his power, and that he intended to appoint a crony.

Many Palestinians, however, are irritated at what they see as foreign interference.

Dr Ali Jarbawi, Professor of Political Science at Bir Zeit University, said last night: “If this is coming by outside injection I do not think it will work.

“They want to defuse Arafat’s powers, which many Palestinians would support, but it is being rejected by many because it is intervention in an internal Palestinian matter.”

Yesterday’s London meeting took place after Israel — under pressure from the White House — had lifted the travel ban that prevented Palestinian ministers flying to Britain last month, and had created a rift with Britain.

Nabil Shaath, the Palestinian Planning Minister, said that the authority would request £1 billion in assistance from international donors for the next 15 months.

• Hebron: Israeli troops killed another Hamas militant yesterday after Shaul Mofaz, the Defence Minister, vowed to hit hard at the radical Islamic group. (AFP)

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