The Palestinian militant group, Hamas, says it is breaking off talks with Palestinian Prime Minister Abu Mazen in protest at his promise to end violence against Israelis.
The Hamas move throws a key part of the peace plan into doubt
Abu Mazen - whose real name is Mahmoud Abbas - vowed at a US-led peace summit in Jordan on Wednesday to end the armed Palestinian uprising.
A spokesman for Hamas, Abdelaziz al-Rantissi, told the BBC that the prime minister's promise had opened the door for Israel to kill Palestinians at will, and that Hamas had been left with no choice but to continue fighting Israel.
The new Palestinian leadership has been facing increasing pressure from Israel and the United States to disarm militant groups as it tries to negotiate peace with the Israelis.
Abu Mazen does not represent us and we refuse to meet with him because there is no point to it
The first phase of the international community's peace plan, known as the roadmap, specifically calls on the Palestinian leadership to rein in the militant groups and stop the attacks on Israeli targets.
Without securing a ceasefire agreement from militant groups, such as Hamas, it will be extremely difficult for Abu Mazen to implement that phase, says the BBC's Richard Galpin in Jerusalem.
Washington said it would continue working to end Middle East violence, despite the Hamas announcement.
"Those who pursue terror have made clear that they are enemies of peace. Hamas has made clear that it's an enemy of peace," said White House national security spokesman Michael Anton.
'Fault of Israel'
The Palestinian Foreign Minister Nabil Shaath blamed Israel for the breakdown in talks between Abu Mazen and Hamas.
He said there was an understanding that at this week's Aqaba summit both Abu Mazen and Israeli Prime Minister Ariel Sharon would make statements strongly backing the roadmap.
Abu Mazen wants Hamas to agree to a truce with Israel
He told the BBC: "The problem is that Mr Sharon did not stick to the rule.
"Had Mr Sharon stuck to the rules as diligently as Mr Abbas did, there would have been no problem of Hamas.
"Hamas saw Abu Mazen say everything that pleased the Israelis, [but] the Israelis say very little out of what they should in accordance with the roadmap."
The collapse of the talks with Hamas compounds a mounting list of problems facing Abu Mazen, our correspondent says.
All the militant groups have refused to lay down their arms.
And the veteran Palestinian leader, Yasser Arafat, has also spoken out against the Jordan summit, saying the Israelis had offered nothing tangible to the Palestinians.
Protest marches organised by Hamas are expected to take place in the Gaza Strip on Friday.
Mr Rantissi's remarks followed the killing of two Hamas members in an overnight gun battle with Israeli forces.
The Palestinian prime minister wanted a negotiated agreement with the militants to avoid a direct confrontation.
They are angry Abu Mazen made his pledge without guarantees of an Israeli withdrawal from the occupied territories.
They are also angry that he failed to mention the basic elements of the traditional Palestinian position - such as the right of return of refugees, the release of prisoners, and that East Jerusalem should be the capital of a future Palestinian state.
The prime minister will find it difficult to crack down on Hamas as the group is very popular, particularly in Gaza, says the BBC's Barbara Plett in Jerusalem.
The al-Aqsa Martyr's Brigades, the armed wing of Yasser Arafat's Fatah Party, has also released a statement saying they will not agree to a ceasefire unless Israel lifts the siege on Mr Arafat, halts killing of Palestinian officials and releases Palestinian prisoners, Israel radio has reported.
Mr Shaath said he feared further violence from Hamas without action by the United States.
"If the Americans want to stop this violence and really implement what we tried to do in Sharm el-Sheikh and Aqaba, they should tell the Israelis to stop immediately further killings of Palestinians, because we have no way of controlling Hamas if that continues."