Arafat loyalist left out of summit delegation
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The top Palestinian negotiator with Israel, Saeb Erekat, has offered to resign.
Mr Erekat is said to have sent a letter of resignation late on Thursday.
The officials say the new Palestinian Prime Minister, Mahmoud Abbas - commonly known as Abu Mazen - asked Mr Erekat to allow him one week to respond.
Palestinian Minister of External Affairs Nabil Shaath said Mr Erekat's resignation was in protest at not being included in the Palestinian delegation that is to meet Israeli Prime Minister Ariel Sharon on Saturday.
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SAEB EREKAT
Chief Palestinian negotiator since 1996
Arafat loyalist
Born 1955 in Jerusalem
Educated in US and UK
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Mr Erekat is known as a Yasser Arafat loyalist, and the BBC's Jeremy Cooke, in Jerusalem, says it appears his resignation may mark a split between senior Palestinian politicians who remain close to Mr Arafat, and a new guard who are more closely aligned with the new prime minister.
Mr Erekat has been a leading Palestinian negotiator with Israel for the last 10 years.
"This resignation has not been accepted, and we still hope it will be reversed once we hold our cabinet meeting tomorrow [Saturday]," Mr Shaath said.
Diplomatic efforts
The resignation comes as the EU foreign policy chief Javier Solana has been leading an intense round of diplomatic activity to promote the so-called roadmap towards peace in the Middle East.
The EU's contact with Yasser Arafat upsets the Israelis
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He has met Abu Mazen and Yasser Arafat.
The latest round of meetings are meant to pave the way for the talks on Saturday between Abu Mazen and Mr Sharon - the first official Palestinian-Israeli contact since September 2000.
But Mr Solana has not held any meetings with Israeli leaders - the prime minister said he was too busy to see him.
The BBC's David Chazan, in Jerusalem,
says Mr Sharon has made it clear that he is reluctant to see Mr Solana because he ignored Israel's policy of trying to sideline Yasser Arafat.
Israel leaders accuse Mr Arafat of inciting violence, and argue that meeting him hampers the peace initiative and could weaken the position of the new Palestinian prime minister.
EU officials argue that Mr Arafat is an elected Palestinian representative and must be included in the new peace initiative.
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ROADMAP MAIN POINTS
Phase 1 (to May 2003): End of terrorism, normalisation of Palestinian life and Palestinian political reform; Israeli withdrawal and end of settlement activity; Palestinian elections
Phase 2: (June-Dec 2003) Creation of an independent Palestinian state; international conference and international monitoring of compliance with roadmap
Phase 3 (2004-2005): Second international conference; permanent status agreement and end of conflict; agreement on final borders, Jerusalem, refugees and settlements; Arab states to agree to peace deals with Israel
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Mr Solana acknowledged that there were difficulties in implementing the roadmap - drafted by the US, Russia, the European Union and the United Nations - but said he was optimistic that it would work.
"I am very happy about the ideas and the steps that Mahmoud Abbas presented to us," Solana said.
The Palestinian prime minister is urging the Israeli Government to accept the proposals. He said he hoped his meeting with Mr Sharon would be positive.
Israeli leaders say they will begin implementing the plan if Abu Mazen curbs violence by militant groups.
But Mr Sharon has many reservations about the roadmap and is expected to put them to President George Bush when he meets him in Washington next week.
Under the plan, a Palestinian state is due to be established by 2005.