Contradiction

"There has been a contradiction between it being Fayyad's government and Abbas' government," said Abdel Majid Sweilam, a political scientist from Al-Quds University.

"Fatah is the one that has been standing against the government, its program and its head," he said, indicating that the party reached a position where it "did not accept his policies any more or even him as a person".

Abbas's Palestinian Authority is in the grip of its worst-ever financial crisis, due to a shortfall in promised foreign aid and Israel's withholding of tax monies for several months, although that decision was recently reversed.

But Fayyad was widely respected internationally for his efforts to fight corruption and build a sound institutional framework for the authority.

Although Israel made no official comment on Fayyad's resignation, Haaretz said senior political figures "expressed much regret" over what the left-leaning newspaper described as "a dramatic development".

"Its ramifications won't just reverberate in the part of the West Bank under Palestinian control, but will also affect Israel and the Obama administration's efforts to renew the peace process, as well as the European Union's policy towards the Palestinians," wrote Barak Ravid.

AFP-Xinhua