THE Palestinian president Mahmoud Abbas threw down a challenge to the government of the militant group Hamas yesterday by calling fresh elections, raising tensions that have already prompted warnings of civil war.

Abbas’s announcement of presidential and parliamentary elections within three months came after a week of mounting violence on the streets and was denounced by Hamas as an attempted coup aimed at returning his Fatah movement to power.

Hamas leaders demanded his resignation and called for a protest demonstration after sunset prayers yesterday in Gaza City, the scene of growing bloodshed between the two sides.

Last night gunmen armed with rocket-propelled grenades and automatic weapons exchanged fire at Khan Yunis in southern Gaza. In Gaza City, thousands of Hamas supporters marched and 18 people were wounded in clashes between the political camps.

The developments threatened Tony Blair’s attempt to launch a peace initiative on his tour of the Middle East, which is due to include a meeting with the Palestinian president.

Blair has indicated his preference for Hamas — whose refusal to recognise Israel has led to crushing sanctions — to join forces with Fatah in a government of national unity.

“The door is still open to Hamas at any point to come into a national unity government,” Blair said last night. But he praised Abbas for “signalling his determination to move on without them [Hamas] if they are unwilling or unable to play a constructive part”.

The prime minister added: “I think this is the moment for the international community to come behind him.”

Abbas is taking a huge political gamble. Fatah is in disarray and he has previously said he would not run for president again. Marwan Barghouti, one of the leaders of the Palestinian uprising, is seen as his most likely heir, but remains in an Israeli jail.

It is by no means certain that Fatah would overturn the parliamentary majority won by Hamas 11 months ago. There is also the possibility that Hamas could boycott elections.

“We have a crisis. We have an authority with two heads. So what do we do? Bullets or ballots?” asked Saeb Erekat, a key Abbas aide. “Abu Mazen said ballots,” he said, using Abbas’s familiar name.

The announcement of elections was greeted by cheers and the honking of car horns by Fatah supporters in Gaza and the West Bank. But Palestinians remain deeply divided, with many saying in interviews yesterday that they feared an upsurge in violence.

“What was wrong with the last election?” asked Nadine, a Gaza student. “They haven’t given this government a chance. This will lead us into civil war.”

Tensions on the streets came to boiling point last week with an alarming upsurge in shootings and kidnappings. “I’m afraid of kidnapping every time we go out in the car,” said a respected professional in Gaza. “I just try and keep the family at home.”

The mood was symbolised in a demonstration outside Abbas’s official residence against the murder of three boys, aged between six and nine, shot dead in a car taking them to school.

Alongside the white, blood-stained vehicle, which belonged to their father Colonel Baha Balousha, a senior Fatah security official, women have gathered all week to protest. Nadia Mohamed, one of the demonstrators, said: “We will not stand by and watch this slaughter any more. We’ll keep on protesting until this bloodshed stops.”

Hamas blamed Fatah for an assassination attempt on Ismail Haniyeh, the prime minister, after he returned to Gaza from a foreign fundraising mission. One of his bodyguards was killed and his son was injured. In renewed skirmishes at a mosque on Friday, 32 Hamas supporters were wounded in the West Bank city of Ramallah when Fatah gunmen opened fire.

“There are always new excuses for each side to act and react,” said Talal Okal, a Palestinian political analyst. “I think the worst is yet to come as long as Hamas and Fatah continue to divide the street with their rivalry.”

In an immediate step to prepare for the elections, Abbas announced that he was appointing new Fatah leaders to replace the discredited old guard who still tarnish the movement. Fatah officials said the party’s younger leaders, who had long fought for a role in decision-making, would now be given their chance.

Abbas also said he had revived the Palestine Liberation Organisation’s negotiating department, signalling he could pursue peace talks with Israel despite the political turmoil.

Israel and the West are eager to boost Abbas in his struggle with Hamas, but know they are largely powerless to influence events. They fear a full-scale civil war could spill over beyond the Palestinian territories, further destabilising the region and threatening not only Israel’s security but moderate Arab states such as Egypt and Jordan, which Blair is trying to bolster.

Additional reporting: Larry Derfner, Tel Aviv

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