Israel has approved Palestinian plans to bury Yasser Arafat in the West Bank city of Ramallah, ending weeks of uncertainty on the issue.
Bulldozers have begun clearing the ground in Ramallah
Mr Arafat, who remains critically ill in a deep coma in hospital near Paris, apparently wished to be buried in Jerusalem but Israel ruled this out.
The Palestinian foreign minister said that only Mr Arafat's heart and lungs were continuing to function normally.
Nabil Shaath said late Wednesday Mr Arafat was now at a critical stage.
It earlier emerged the veteran Palestinian leader suffered a brain haemorrhage on Tuesday.
Egypt has announced it is willing to host a state funeral for Mr Arafat.
Diggers and bulldozers have moved into his Ramallah compound, possibly to clear space for a grave.
The proposal would enable Arab leaders to attend.
A Palestinian official said Mr Arafat's fate was "in God's hands".
Senior Palestinian politicians are back in Ramallah after visiting him in France.
They have been holding a series of meetings inside the ruined presidential compound which has been the Palestinian leader's home for more than three years.
They are also expected to give an update on their leader's condition.
A Palestinian cleric who visited Mr Arafat at the Percy military hospital in Clamart insisted he was still alive.
Taissir Dayut Tamimi, the head of the Palestinian Authority religious court, is said to be a close friend of the 75-year-old Mr Arafat.
Mr Tamimi said there was no question of switching off Mr Arafat's life support machine "as long as there is warmth and life in his body".
The Palestinian envoy to France, Leila Shahid, told French radio that Mr Tamimi was not coming "to disconnect" Mr Arafat.
"We think having a religious person beside him in these difficult moments is relevant," said Palestinian Foreign Minister Nabil Shaath, one of the team who visited the hospital on Tuesday.
On his visit, he was accompanied by Prime Minister Ahmed Qurei, PLO deputy leader Mahmoud Abbas and Palestinian parliamentary speaker Rawhi Fattuh.
The United States has told possible successors to Mr Arafat that it is ready to engage with them when appropriate, US Secretary of State Colin Powell said.
Preparations are now publicly under way for a post-Arafat era, says the BBC's James Reynolds in Ramallah.
In the event of Mr Arafat's death, the speaker of Palestinian Legislative Assembly, Rawhi Fattuh, will take over the presidency for 60 days until a new president is elected.
The Israeli preference for Mr Arafat's final resting place was the Gaza Strip, where his family has a burial plot, as the area is more isolated and easier for security forces to seal off - but the proposal was rejected by Palestinian officials.
Mr Arafat was taken to France on 29 October, leaving his battered headquarters for the first time in nearly three years. He had been suffering mystery stomach pains.
A week ago he fell into a coma, which deepened on Monday.
Doctors have confirmed that Mr Arafat's coma had deepened and that he suffered a brain haemorrhage on Tuesday.
However, the reasons for his illness are still not clear.
Mr Shaath said doctors have ruled out cancer and poisoning. He added that Mr Arafat's long confinement in Ramallah by Israeli forces had contributed to his poor health.
Mrs Arafat's wife, Suha, has been controlling access to her husband and on Monday she accused other Palestinian leaders of conspiring against her husband.
They were, she told Arabic TV station al-Jazeera, trying "to bury Arafat while he is still alive".
There has been much confusion about Mr Arafat's condition.
Last week Israeli television reported that he was dead. Other reports, rejected by Mrs Arafat, have suggested he is brain dead.