The head of the Palestinian parliament's political committee, Dalal Salama, said Arafat would be attending a meeting of Fatah deputies which would also seek to choose a new parliament speaker to replace Qorei.

Later the Fatah central committee was scheduled to meet in a bid to overcome the last obstacles to naming a cabinet.

Qorei was sworn in by Arafat as the head of a one-month eight-man emergency cabinet on October 7, after his predecessor Mahmud Abbas resigned after losing a power struggle with Arafat.

It is expected to form the nucleus of an enlarged government which has to be presented to the Palestinian parliament for approval within the next three days.

Israel's private television channel said late Friday that Sharon may hold a summit meeting with Qorei after the new government is formed.

Israel may also take substantive steps to alleviate military blockades, curfews and other draconian restrictions on Palestinians, the television reported.

Sharon is "ready to consider such a meeting," the television said, but his office refused to either confirm or deny the report when questioned by AFP.

Sharon said Thursday that contacts were still underway with Palestinian officials, which Arafat's top adviser Nabil Abu Rudeina confirmed, albeit dismissing the premier's announcement as "not serious and domestically motivated".

Trade and Industry Minister Ehud Olmert, who is number two in the Israeli cabinet, stressed Friday that the contacts are "very serious", without elaborating in an interview with state television.

Israeli public radio said Sharon would welcome a new ceasefire by Palestinian militant groups that Qorei is reportedly in the process of negotiating but would still demand the dismantling of those groups.

The radio also said that Defence Minister Shaul Mofaz had recently contacted Palestinian security chiefs, and Sharon's top aide Dov Weissglas had spoken with other Palestinian officials.