Yasser Arafat is in his "final hours" after suffering brain damage and kidney and liver failure, said French Prime Minister Jean-Pierre Raffarin.
Preparations for Yasser Arafat's death are gearing up
Preparations are under way to hold a funeral service in the Egyptian capital Cairo, possibly as early as Friday.
After a religious and military ceremony at the main airport, the 75-year-old's body will be taken to the West Bank town of Ramallah for burial.
But a top Islamic cleric ruled out switching off Mr Arafat's life support.
"As long as there are signs of life in the body of the president, he will remain under treatment," said Taissir Dayut Tamimi, head of the Palestinian Authority religious court.
"It is prohibited in Islam".
Palestinian Foreign Minister Nabil Shaath said late on Wednesday only Mr Arafat's heart and lungs were continuing to function normally.
It earlier emerged the veteran leader suffered a brain haemorrhage on Tuesday.
Mr Raffarin told French television: "I hope that we can respect the final hours of a man who is approaching death".
Arafat aide, Nabil Abu Rdeneh, arrived in Cairo on Wednesday to discuss funeral arrangements.
"Should the Palestinian leader die in the coming hours, as his doctors are expecting, there will be an official funeral in Cairo on Friday with the participation of kings, princes and heads of Arab and Islamic states," he said at Cairo airport.
The decision to hold the funeral in Egypt is seen as a compromise solution, enabling Arab leaders and other guests to attend without the complication of travelling to the West Bank or Gaza.
But precisely who might attend is not clear, says the BBC's Jon Leyne in Cairo.
Mr Arafat had many admirers but also made enemies in the Arab world and elsewhere.
Meanwhile, Israel approved Palestinian plans to bury Yasser Arafat in the West Bank city of Ramallah.
Diggers and bulldozers have moved into his Ramallah compound, possibly to clear space for a grave.
The announcement ended weeks of uncertainty on the issue, with Israel rejecting an apparent wish by Mr Arafat to be buried in Jerusalem.
'Opening for peace'
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.
US President George W Bush said on Wednesday he saw an opening for renewed peace negotiations with a new Palestinian leadership.
"There will be an opening for peace when leadership of the Palestinian people steps forward and says help us build a democratic and free society," he said.
"When that happens... the United States of America will be more than willing to help build the institutions necessary for a free society to emerge so that the Palestinians can have their own state."
US Secretary of State Colin Powell said it "remained to be seen" whether the new leadership would reign in the militants. But "we stand ready to work with them," he added.
Mr Arafat was taken to France on 29 October, leaving his battered headquarters in Ramallah for the first time in nearly three years. He had been suffering stomach pains.
A week ago he fell into a coma, which deepened on Monday.
There has been no official reason given for his illness, which has led to much confusion and speculation.
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".