The Hamas-led Palestinian Government ordered its new militia off Gaza’s streets today after a week of clashes with the official security forces dominated by President Mahmoud Abbas’s Fatah movement.

The move came on the second of two days of national dialogue talks, aimed at halting the spiral of violence that has stirred fears of civil war, and at finding a way out of the deadlock that has paralysed the Palestinian government and frozen relations with most of the world.

Mr Abbas stunned Hamas yesterday with an ultimatum to back a proposal for Palestinian statehood that implicitly recognises Israel.

The President gave the government 10 days to back the plan or face a referendum on the issue a month later, effectively going over the heads of the Islamist militants and setting the stage for a showdown. Hamas seeks to destroy Israel and has so far rejected the President’s calls for talks with the Jewish state.

The Hamas militia has been at the centre of growing tensions in Gaza that have left many fearing all-out conflict.

The rifle-toting gunmen, wearing black T-shirts, khaki vests and camouflage pants, took up positions on street corners last week. Since then ten people have been killed in Fatah-Hamas clashes, and a senior commander from Fatah was seriously wounded in an assassination attempt.

Hamas officials say that the new force will not be disbanded, despite calls from Mr Abbas to do so, but integrated into regular police units. The gunmen were not in sight today, and the streets of Gaza City were quiet.

"We are complying with orders," said Youssef Zahar, a leader of the militia. Said Siyam, the Interior Minister, had ordered the forces to gather in "fixed" centres and to provide assistance to regular police forces if requested, he added.

Ghazi Hamad, the Cabinet spokesman, said that Ismail Haniya, the Prime Minister, had telephoned Mr Abbas to tell him of the decision.

The militia's withdrawal represents a concession by Hamas, which only days earlier said it had no intention of withdrawing the force. Fatah officials have accused the "black militia" of spearheading a coup against the president, and have ordered extra weapons to arm Mr Abbas's presidential guard. Unusually, Israel has agreed to permit the extra arms into the Palestinian areas in order to protect the President.

However all eyes are now fixed on how Hamas will respond to Mr Abbas's ultimatum, seen as a high risk political strategy that could end in further conflict and disarray.

The two-state plan was drawn up in an Israeli jail by senior prisoners from factions including Fatah, Hamas and the even more hardline Islamic Jihad.

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