Mr Abbas's authority is largely confined to the West Bank
The Palestinian Authority's central council has voted to appoint Mahmoud Abbas as Palestinian state president.
It is a symbolic title, as a Palestinian state has not yet been formed. The position has been vacant since Yasser Arafat's death in 2004.
The militant group Hamas rejected the move, saying the power to elect the state president rested with the people.
Mr Abbas, who is already president of the Palestinian Authority, is locked in a power struggle with Hamas.
He has threatened to call elections if there was no progress in reconciliation talks.
He said he might issue a decree early in 2009 for presidential and parliamentary polls, but gave no date. His term in office ends on 9 January.
Analysts say he is unlikely to call the polls, given the strength of Hamas, which controls the Gaza Strip.
Hamas quickly rejected the proposal, saying the idea was "unconstitutional".
A Hamas leader in Gaza also said the appointment of Mr Abbas as Palestinian state president showed the difficulties that he is facing.
Hamas leader Mahmoud Zahar: 'The central council is not authorised to make this appointment'
"It's a symbol indicating the political problem that Abu Mazen [Mahmoud Abbas] and his group are facing while he is going to lose his official position as the [president] of the Palestinian Authority," said Mahmoud Zahhar.
Mr Zahhar said the central council was not authorised to appoint the state president - this could only be done by a popular vote.
Mr Abbas had previously indicated he intended to remain in office a further year - the term of the Hamas-led parliament.
"If the dialogue with Hamas fails, early next year I will call for simultaneous presidential and parliamentary elections," he told members of the Palestine Liberation Organisation (PLO) in the West Bank town of Ramallah.
But Hamas - which has repeatedly stressed its opposition to any extension of Mr Abbas' term in office - quickly asserted its opposition to the plan for early polls.
The movement won a clear majority in the Palestinian parliament in the election of January 2006.
It seized control of the Gaza Strip last year and has clashed with Mr Abbas' supporters there and in the West Bank.
Mr Abbas was elected for a four-year term in January 2005.
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