Palestinian leaders 'settle differences' as Britain refuses to dump Arafat

"President Arafat and Mahmud Abbas settled their differences during their meeting by adopting a formula on the ways and means of conducting future negotiations (with Israel) as well as over security matters," a Palestinian official told AFP, requesting anonymity.

The official gave no details of the agreement struck at Arafat's leadership compound in the West Bank town of Ramallah but said it would avoid the appearance of a quarrel between the two men in future.

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Abbas' role remained unchanged and he would retain "the prerogatives defined by the Palestinian constution", the source said after the meeting, convened after extensive efforts by mediators.

It was the first meeting between the pair since Abbas offered to resign from the central committee of Arafat's Fatah movement last week.

The resignation gesture came after Abbas faced charges from fellow Palestinian leaders of being too soft in peace talks with Israel, especially on the issue of Palestinian prisoner releases.

Sharon has accused Arafat of trying to undermine Abbas, who offered to resign last week from the central committee of Arafat's mainstream Fatah movement.

But Sharon's campaign to persuade foreign governments to sever links with Arafat suffered a blow Monday when Britain made clear it would maintain contacts.

Foreign Secretary Jack Straw stressed during talks with Sharon that Britain would continue to deal with Arafat as and when it was judged to be "useful", a British official said.