Yasser Arafat says he expects an announcement "within hours" on an agreement by Palestinian militias to suspend attacks on Israelis.
Mr Arafat retains a vital role as a figurehead for Palestinians
The Palestinian leader's comments are the strongest sign yet that a temporary truce will be offered by the three main militant groups - Hamas, al-Aqsa Martyrs' Brigade and Islamic Jihad.
But leaders of those groups immediately rejected the statement that a deal was hours away, though they said an announcement may come in the next few days.
And the BBC's Barbara Plett in Ramallah says any ceasefire will be a unilateral move by the Palestinians as the Israelis continue to insist that militant groups are dismantled, not negotiated with.
Violence has been continuing with an Israeli man shot dead near the Green Line between Israel and the West Bank hours after two Palestinians died in an Israeli attack on suspected militants.
Palestinian Prime Minister Mahmoud Abbas - better known as Abu Mazen - has been trying to secure agreement from the armed factions to suspend attacks on Israelis for a period of three months.
We are still waiting for responses from our [fighters] in the field and also from those in Israeli prisons - we cannot do that in a few hours
But correspondents say Mr Arafat continues to have a vital central role to play with the militant groups and with the broader Palestinian public.
His comments, after a meeting with Ireland's foreign minister, were explicit.
"Until now, it has not been officially decided, but we expect that in the coming few hours, there will be a declaration," he said.
Mohammad al-Hindi, a top Islamic Jihad official, said truce talks have been ongoing, but Mr Arafat's timetable was too optimistic.
"We are still waiting for responses from our [fighters] in the field and also from those in Israeli prisons. We cannot do that in a few hours," he said.
Asked when a truce announcement might be made, Mr Hindi said: "It is fair to say in the next few days."
Abdel-Aziz al-Rantissi, second-in-command of Hamas and himself a target of a recent Israeli assassination attempt, agreed that it would be days before a final decision was made, the AFP news agency reported.
Earlier, speculation about an impending ceasefire had been rejected by officials from both the groups involved and the Palestinian Authority, where Abu Mazen is leading efforts to implement the roadmap.
Phase 1: (planned to start May 2003) End to Palestinian violence; Palestinian political reform; Israeli withdrawal and freeze on settlement expansion; 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
Correspondents say that details may yet have to be worked out and the success of a cessation of attacks on Israelis is far from guaranteed.
US President George W Bush said earlier he would only believe reports that a ceasefire was near "when I see it".
A truce declaration could coincide with Sunday's scheduled visit to the Middle East by US National Security adviser Condoleezza Rice.
She and US Secretary of State Colin Powell have been personally charged by the president to promote the roadmap and do what they can to bring peace between the Israelis and the Palestinians.
Ending violence is a key first stage on the US-backed roadmap peace plan which promises security for Israel and a Palestinian state, but bloodshed continued on Thursday.
West Bank killing
An Israeli man was shot dead near the Green Line between Israel and the West Bank on Thursday morning.
One report said the killing was claimed by members of al-Aqsa Martyrs' Brigade, an offshoot of Mr Arafat's own Fatah movement.
The attack followed the deaths of two Palestinians during an Israeli operation in which helicopter gunships fired missiles apparently aimed at Hamas militants on Wednesday night.
Those deaths prompted renewed threats against Israelis from militant groups.