Further divisions have emerged within the Palestinian leadership about who should be in control of security issues, with a leading Fatah movement member being nominated to take charge.
Palestinian police have closed tunnels as part of moves against militants
Palestinian leader Yasser Arafat is backing a proposal for Nasser Yousef for the post of interior minister in overall charge of security matters.
The move comes at a time when both the international community and Israel are increasing pressure on the Palestinians to take firmer action to end attacks by Palestinian militants on Israelis.
Correspondents say this also appears to be a direct challenge to the current Palestinian security chief, Mohammed Dahlan, and is seen as directly undermining Prime Minister Mahmoud Abbas, who supports him.
Mr Dahlan has promised a series of measures to restore law and order in the Gaza Strip.
At the weekend a new campaign against the militants began with a number of arrests being made after Palestinian police sealed tunnels used for smuggling guns into the Gaza Strip from Egypt.
However shortly afterwards, militants fired a crude missile from Gaza into Israel, which caused no damage but was seen as a direct challenge to the campaign.
The Israelis dismissed the latest Palestinian moves as "smoke and mirror" tactics.
"This decision [to propose Nasser Yousef] is not a correct decision," the prime minister's office said in a statement, according to the French news agency AFP.
"What is required is to unite all security organisations in the
Palestinian Information Minister Nabil Amr told Israel Army Radio: "There is a small crisis now about how we will strengthen
the unity of our security forces... and how the Palestinians
will enforce the willingness of the authority and the rule
Long-serving PLO member
Spent 1980s in exile with Arafat
Served as a senior police officer with Palestinian Authority
Mr Arafat has appealed to the European Union to become more involved in peace moves in the region.
He has been sidelined for more than a year by the Americans, who prefer to deal exclusively with Mr Abbas, also known as Abu Mazen, who was appointed prime minister earlier this year.
He was called by EU foreign policy chief Javier Solana and British Foreign Secretary Jack Straw, and urged the EU to do more to promote the US-backed roadmap peace plan, according to Palestinian reports.
A week of bloodshed has engulfed the peace plan with Palestinian militant groups calling off a seven-week-old ceasefire after the Israelis killed a Hamas leader on Thursday in retaliation for a suicide bombing which killed 21 people in Jerusalem.