Palestinian leader Mahmoud Abbas has appointed a new prime minister, a day after dissolving the Hamas-led coalition, officials say.
Former Finance Minister Salam Fayyad, an independent, has been asked to take over and form an emergency government.
It comes amid political upheaval in Gaza, where Hamas has forcibly taken control from its Fatah rivals.
But Ismail Haniya, of Hamas, said he was still prime minister, while Hamas denounced Mr Abbas' move as illegal.
Hamas' exiled political chief, Khaled Meshaal, meanwhile said his movement will work with Mr Abbas.
"He is an elected president, and we will co-operate with him for the sake of national interest," he said.
Pledge of support
A former World Bank executive, Mr Fayyad is a well-respected figure internationally.
In recent months, foreign governments have chosen to deal with him directly as a means of bypassing Hamas, but Hamas swiftly rejected the appointment, saying it viewed the entire interim administration as illegal.
"It is a coup against legitimacy and a transgression of all the laws," Hamas spokesman Sami Abu Zuhri told the AFP news agency.
The group of Middle East mediators known as the Quartet - the US, UN, EU and Russia - pledged their "full support" for Mr Abbas, a spokeswoman for EU foreign policy chief Javier Solana, said.
Born in 1952 near West Bank city of Tulkarm
Holds a PhD in economics from the University of Texas
Worked at the World Bank in Washington from 1987-1995
IMF representative to Palestine until 2001
Finance minister under the Fatah-controlled administration from 2002-2005
Credited with cracking down on official corruption
Arab foreign ministers are holding an emergency meeting in Cairo, while Egypt has pulled its envoys out of Gaza in protest at Hamas' takeover.
An uneasy calm has returned to the Strip after a week of fierce fighting between members of Mr Abbas's Fatah movement and Hamas, which claimed at least 100 lives.
Vehicles returned to the roads and shops were open in Gaza. Few armed men were visible on the streets and there were reports of only sporadic gunfire.
However, outbreaks of looting at former Fatah strongholds were reported, while the home of Fatah strongman Mohammed Dahlan was stripped bare.
Masked Hamas gunmen ransacked Mr Abbas' seafront offices on Friday, discarding portraits of the Palestinian Authority President and his predecessor, Yasser Arafat, on the floor, their glass frames in pieces.
As Hamas consolidated its grip on power, the group said it had released several top Fatah military commanders seized during the violence under a prisoner "amnesty".
Hamas' military wing called for the immediate release of BBC journalist Alan Johnston, abducted in Gaza in March.
They said his continued detention was unacceptable and Hamas TV reported on Friday night that "practical steps" were being taken to bring about Mr Johnston's freedom.
Meanwhile, about 200 Fatah officials from Gaza have sought refuge in Egypt since Thursday.
A further 3,000 Palestinian civilians are now stranded on the Egyptian side of the Rafah crossing which is closed. Rafah provides the people of Gaza with their only point of access to the outside world.
Hamas has said it intends to take control of the crossing point. However, it is not certain that Israel, Egypt and the European monitors who operated the facility will allow that.
Rule by decree
President Abbas dismissed the three-month-old unity government on Thursday and declared a state of emergency.
He has said he will rule by presidential decree until the conditions are right for early elections.
Under the Palestinian Basic Law, essentially the Palestinian constitution, the president can rule by decree for 30 days. This can be extended with the approval of the parliament.
The BBC's Matthew Price in Jerusalem says this may be an irrelevance, as Mr Abbas appears to no longer have any influence in Gaza.
Our correspondent says the West Bank and Gaza Strip will now effectively be split from one another - Gaza run by Hamas and the West Bank by Fatah.
There are also fears that violence will spread to the West Bank, where Fatah is dominant.