Hamas fighters abducted a senior Fatah official, who was later released, and another Fatah supporter was killed. “This ceasefire risks being blown away in the wind,” a Fatah spokesman said.

The fighting came hours after Mr Blair publicly backed President Abbas, head of the secular Fatah party, in his power struggle with Hamas, his Islamist rivals. Mr Blair declared Hamas to be an obstacle to peace because of its refusal to recognise Israel. “Nobody should have a veto on progress,” he said.

Standing alongside Mr Abbas in Ramallah, the Prime Minister said: “The international community needs to mobilise its efforts to support you in your office as President, to support the Palestinian people and make sure we stand ready to do everything we can.”

Ehud Olmert, the Israeli Prime Minister, said that he hoped to meet Mr Abbas “very soon”, adding that Israeli and Palestinian officials were working on talks about the release of prisoners.

Britain said yesterday that it was preparing to spend up to £1 million of the £60 million Palestinian aid budget to bolster Mr Abbas’s personal security force. But Mr Blair’s intervention comes amid international concern that US-led proposals to give Mr Abbas guns and fighters amount to backing one side in a civil war.

Condoleezza Rice, the US Secretary of State, said that she would ask Congress for tens of millions of dollars to strengthen Mr Abbas’s security forces amid reports that more than 1,000 Palestinian exiles in Jordan would be used to boost his Presidential Guard.

Hamas accused Mr Blair of “inflaming the political situation”. Said Siyam, the Hamas Interior Minister, said: “This is expected from these parties, who don’t want this Government to remain in power.”

Since Hamas assumed power this year, Israel and the West have waged economic war against it. Israel has confiscated more than $600 million (£308 million) in tax revenues and donors have halted hundreds of millions in aid.

Mr Blair bridled at accusations that the West was trying to “bribe” Palestinians into supporting Fatah by channelling aid directly through Mr Abbas’s Presidential office. But some countries and aid agencies are circumventing the embargo in just such a fashion. In Gaza hundreds of Palestinians now sweep the roads for $10 a day as part of a temporary scheme to alleviate poverty, rehearsing the now-universal Palestinian dilemma: whether to follow their pockets or their principles.

Jabr Massoud, 40, a father of ten, said that the one-month job creation scheme was better than nothing. But he added: “The Government should recognise Israel if that’s what it takes for people to survive. All the Arab countries are recognising Israel now.”

His remarks prompted one fellow listener, Hisham, to shout angrily: “You want to recognise Israel for a month’s pay? It is an occupation, it’s our land. There is no Israel.”

With 60 per cent of Palestinians in favour of early elections, the economic pressure appears to be taking its toll on Hamas. But Mr Abbas’s party is still in disarray. Asked if Fatah had learnt the lessons of its election defeat, Khalil Shikaki, an opinion pollster, said: “I don’t believe so. Fatah has not dealt with the basic problems between the old guard and young guard.” One Fatah fighter told The Times that he expected more clashes with Hamas and that foreign initiatives would make less difference than tangible benefits on the ground. “What will strengthen Abbas is if they pressure Israel to release Palestinian prisoners in their jails, lift the siege, stop pursuing wanted men. You could put $1 billion into Abbas’s forces and give them rockets and planes and the civil war would still go on in Gaza. Whatever they give him, Hamas can get ten times more from Iran and the Islamic world.”

Khaled Abu Hillal, an Interior Ministry spokesman, said: “Any Palestinian who comes back to his homeland will turn into a fighter against the occupation forces.”

Pro-Fatah

1 Mr Abbas’s threat to hold elections brings Hamas back to the negotiation table to form a national unity coalition. Hamas support slips because of international sanctions so it agrees to step aside for technocrats who, without formally recognising Israel, accommodate a two-state solution. International aid resumes, Israel repays $600 million in confiscated taxes and the crisis eases

2 Mr Abbas holds and wins elections. Fatah sees voters swing back in its favour, chastened at the realisation that Hamas could not secure international legitimacy

Anti-Fatah

1 Mr Abbas is humiliated by legal challenges that win a ruling that he has no power to dismiss an elected Palestinian government for early elections. The Hamas- Fatah stalemate continues. Civil war edges closer

2 Hamas calls Mr Abbas’s election bluff and boycotts the poll, calling it a coup. The results lack legitimacy. Hamas takes its fight against Fatah and Israel back to the streets

3 Deadlock. Mr Abbas wins a close presidential race against Hamas but loses parliamentary elections as Hamas exploits resentment at Fatah’s corruption, nepotism and inefficiency

4 Hamas wins presidential and parliamentary elections, exploiting resentment at international interference in domestic politics. Channels millions of dollars from Iran and other donors into its coffers, consolidating its hold on the Palestinian Authority and energising Islamist opposition in neighbouring states

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