The Palestinian leader, Yasser Arafat, received the strongest challenge yet from a protege when Mohammad Dahlan, a former interior minister, accused him of squandering $5bn (#2.74) and "sitting on the corpses" of Palestinians. He said that if Mr Arafat did not begin to reform the Palestinian Authority there would be massive demonstrations on August 10 in Gaza City.
In an interview with the Kuwaiti newspaper Al Watan he said: "Arafat is sitting on the corpses and destruction of the Palestinians at a time when they're desperately in need of a new mentality."
All of the funds which foreign countries had donated to the Palestinian Authority, a total of $5bn "have gone down the drain, and we don't know to where," he added.
Mr Arafat's policies had brought about a situation in which Palestinian lives were in ruins. "The Palestinian situation is not putting up with any more corruption, and there is no escape aside from reforms that Arafat himself has authorised," Mr Dahlan said.
He is rumoured to have instigated a series of incidents against Gaza security chiefs appointed by Mr Arafat and accused of corruption. But this is the first time he has publicly attacked the leader and placed himself at the head of an emerging reform movement.
Mr Dahlan, 43, has broad support in the Gaza Strip and is respected by Israel and the United States. Like all critics of Mr Arafat, he believes it is vital that he should remain leader of the Palestinians but more efficient managers should handle Palestinian affairs.
Israel's proposal to withdraw from settlements in the Gaza Strip has created a sense of urgency about reforming the authority and removing a generation of bureaucrats appointed by Mr Arafat and seen as corrupt and incompetent.
Yesterday gunmen loyal to Mr Arafat broke up a conference attended by Palestinian legislators in Ramallah, saying the meeting was part of a conspiracy against him.
Seventy members of Fatah, Mr Arafat's faction, were meeting to discuss reform and growing anarchy in the Palestinian territories when the 20 men burst in and fired into the ceiling.
The meeting was ended, but not before a letter was drafted to Mr Arafat denouncing the lawlessness and corruption in the authority.
"President Arafat, this may be the last chance for reforming our situation before reaching the end. We need a revolution within our Fatah movement," it said.
Last month militants kidnapped Ghazi Jabali, the chief of police, and demanded his dismissal.
Mr Arafat's proposed replacement, his relative Moussa Arafat, was seen as even more corrupt and he was forced to withdraw the appointment.
The kidnapping was the first sign of an emerging confrontation between Mr Arafat's old guard and reformist politicians and militants who are determined that the authority should become democratic.
Since Mr Arafat returned to the Palestinian territories in 1994 he has been accused of presiding over an almost feudal regime in which his appointees grow rich on public funds in return for their loyalty.
Since Ariel Sharon, the Israeli prime minister, proposed withdrawing from the Gaza settlements, Palestinian lead
In recent months Mr Dahlan has been tentatively setting out a platform on which to oppose Mr Arafat.
In a succession of interviews he has said that the Palestinians must choose whether they want war or peace with Israel. War has clearly failed, he says, leaving peace as the only viable option.
In contrast to Mr Arafat's strategy of ambiguity, condemning violence but doing nothing to stop it, Mr Dahlan said the authority should pre
o Israeli troops opened fire in a Gaza Strip refugee camp early today, killing a 60-year-old woman and wounding four other Palestinians, witnesses said.
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