Palestinian leader Yasser Arafat is facing mounting international calls to reform the Palestinian security forces after two days of fighting in Gaza.
Kofi Annan said it was essential to restore order
UN Secretary-General Kofi Annan said Mr Arafat should heed the wishes of his government and put control of the security forces under central command.
Militants calling for an end to corruption and cronyism clashed with security forces at the weekend.
Mr Arafat has now reversed his decision to name a relative as head of security.
The call for reform on the street has been taken up by the Palestinian Cabinet.
Prime Minister Ahmed Qurei submitted his resignation to Mr Arafat in protest at the growing lawlessness in the Gaza Strip, but Mr Arafat rejected it.
Mr Qurei has now formed a ministerial committee which is going to Gaza to try to mediate an end to the violence.
The weekend saw a string of high-profile kidnappings and fighting among Palestinians but Monday was peaceful.
The BBC's Alan Johnson in Gaza says the high-level delegation will be hoping to build on this calm, but the roots of the current turmoil are deep.
A divide has opened up between Mr Arafat's established old guard and a younger generation that is convinced the Palestinian Authority needs to be extensively reformed, our correspondent says.
Israel's planned withdrawal from Gaza by 2005 is also increasing the tension as factions jostle to be the one left in control.
Mr Annan said the Palestinian Authority was in a serious crisis, and that Mr Arafat should take measures to reform his security services.
"Chairman Arafat should really take the time to listen to the prime minister and other members of his leadership, and taken the necessary steps to bring the situation under control," he said.
Mr Annan's comments follow criticism from UN envoy Terje Roed-Larsen, who said last week that the Palestinian Authority was not taking action to end violence and combat terror.
In Washington, White House spokesman Scott McClellan said the US wanted to see the Palestinian Cabinet "committed to cracking down on terrorism and establishing a unified security structure to improve the security situation".
The state department said Mr Arafat's attitude continued to be unhelpful.
"We think that the security services need to be consolidated, that the governmental authority, the prime minister in the government, needs to have authority over the security services, as well as the other institutions of government," spokesman Richard Boucher said.
But Mr Arafat is reluctant to transfer control of the security forces because they are a key pillar of his rule, the BBC's Barbara Plett in Jerusalem says.
Mr Arafat's chief negotiator, Saeb Erekat, admitted that growing anger among Palestinians indicated the depth of the crisis.
"But we have been warning in the last three years that as long as the Israelis continue to destroy our basic security forces - the infrastructure and the Palestinian Authority - what will materialise in the street will be militias and lawlessness," he told the BBC's Newshour programme.
On Monday Abdel Razek al-Majeida was reinstated as director of general security for the Palestinian areas, a post he was asked to leave last week, while Mr Arafat's cousin Moussa returned to his old job as head of military intelligence in Gaza.
Moussa Arafat's brief promotion had sparked a revolt in Gaza among militants who saw it as evidence of cronyism.
Members of the al-Aqsa Martyrs' Brigades - an offshoot of Mr Arafat's own Fatah movement - attempted to storm the headquarters of military intelligence in the town of Rafah late on Sunday.
The violence has prompted the UN agency dealing with Palestinian refugees to pull some of its foreign staff, AFP news agency said.
The UN Relief and Works Agency (Unrwa) said around 20 of its 55 staff would be re-located to Jerusalem.