Arafat and Abbas 'close rift'

The rift threatened to undermine the peace process

Palestinian Prime Minister Mahmoud Abbas and Yasser Arafat appear to have settled their differences after talks in Ramallah.

The two men met on Monday for the first time since Mr Abbas - also known as Abu Mazen - threatened to resign last week from Mr Arafat's Fatah movement unless it backed his handling of negotiations with Israel.

"The disputes are over and things are all right," Abu Mazen told reporters after the meeting. Mr Arafat did not comment.

The two men have clashed over a number of issues since Mr Arafat yielded to international pressure and appointed Abu Mazen as his first prime minister.

The split was widely seen as part of a broader power struggle over reforms within the Palestinian Authority, as well as on the direction of the peace process, the BBC's Michael Voss says.

The two have struggled for control of the crucial security services, with Mr Arafat reluctant to hand over too much power to Abu Mazen's chosen security chief, Mohammed Dahlan.

Prisoners

More recently the two old comrades have disagreed over how hard to press Israel to release Palestinian prisoners.

Sharon sought a promise from Britain to isolate Arafat

Israel has agreed to free several hundred of the thousands of detainees it holds, but has resisted releasing those who it says "have blood on their hands".

Some supporters of Mr Arafat had said Abu Mazen had been too soft on the issue of prisoner releases.

The two men reportedly reached a deal - after not speaking for four days - that reaffirms Abu Mazen's authority to hold talks with Israel.

But under the agreement he will reportedly urge Israel to end its de facto confinement of Mr Arafat himself, who has not been allowed to leave Ramallah.

In London, British foreign office officials said Britain would continue to deal with Mr Arafat, despite an appeal by the visiting Israeli prime minister, Ariel Sharon, not to do so.