Palestinian Prime Minister Mahmoud Abbas, increasingly unpopular and worn out by a power struggle with Yasser Arafat, submitted his resignation Saturday, dealing a serious blow to a U.S.-backed peace plan.

Abbas, who was backed by Israel and the United States, told a closed-door session of the Palestinian parliament that his decision was final. In a statement issued later, Abbas listed a number of reasons for his resignation, including what he said was Israel's unwillingness to implement its obligations in the "road map" peace plan, and "harsh and dangerous domestic incitement against the government."

Israel immediately warned that it will not accept a new government controlled by Arafat or one of his loyalists, but did not make clear what action it would take, if any.

A Foreign Ministry statement on Saturday said Palestinian President Yasser Arafat was a threat to the stability of the Middle East and ruled out any talks with him. "The Palestinian people need to choose between the way of negotiations and peace, and that of terror and violence."

"The Israeli government will not conduct negotiations with Arafat. The man is part of the problem and not part of the solution. He is a direct cause that threatens stability in the area," the statement said...