A top Muslim cleric rushed to Yasser Arafat's hospital bedside yesterday, insisting the veteran Palestinian leader was still alive even as aides arranged for his burial and prepared for a transfer of power.

Mr Arafat, 75, suffered a brain haemorrhage on Tuesday at the French hospital where he was flown from the West Bank on October 29 and had lain in a coma. Officials maintained in public that he was alive, though aides said privately that he was dead.

Palestinian sources said Mr Arafat's death could be announced within days and arrangements were being hastily made for a funeral in Cairo and burial at his West Bank headquarters.

Earth-moving equipment set to work digging up the grounds of Mr Arafat's shell-shattered compound in Ramallah, which was to be turned into a shrine to the icon of Palestinian nationalism.

But adding to the confusion, Sheikh Tayseer al-Tamimi, a leading West Bank cleric, told reporters after seeing Mr Arafat at the military hospital in a Paris suburb: "He is sick and his condition is very difficult, but he remains alive."

"As long as there is a manifestation of life present, from movement to temperature in the body, then he is alive," said Mr Tamimi, who recited Koranic verses at his bedside.

Saying Mr Arafat was "at a very critical stage", Foreign Minister Nabil Shaath said Mr Arafat's liver and kidneys had failed though his heart and lungs were still functioning.

Mr Shaath said later he would travel to Cairo yesterday evening to help with arrangements for the funeral of the man who spent four decades leading his people's fight for statehood.

Defusing a potential row with the caretaker Palestinian leadership, Israel agreed to allow Mr Arafat to be interred at his Ramallah compound and to let Arab leaders attend if they wished, Israeli political sources said.

Admired by most Palestinians but reviled by many Israelis, Mr Arafat would be laid to rest with his dream of a Palestinian state unrealised, a possible power struggle brewing and the threat of chaos in Palestinian territories looming.

Israeli Prime Minister Ariel Sharon, Mr Arafat's longtime foe, told ministers the Palestinian president's death could usher in a new era in the Middle East but that would depend on whether the new leaders "end terror and incitement", Israel Radio said.

Palestinian leaders huddled to debate their future, while ordinary Palestinians grew increasingly perplexed. "Is he dead or not dead?" said Ali Zaituna in Gaza. "We will only believe it when a Palestinian official appears and says it."

Three senior officials - Prime Minister Ahmed Qurie, Palestine Liberation Organisation Secretary General Mahmoud Abbas and Mr Shaath - returned from Paris yesterday.

At a leadership meeting, they reaffirmed that after Mr Arafat's death they would follow laws calling for the parliament speaker, Rawhi Fattouh, to become interim president for 60 days until elections could be held.

Officials said Mr Abbas, a reform-minded former prime minister and Mr Arafat's deputy in the Palestine Liberation Organisation, emerged as the favourite to succeed him as chairman of the PLO, the Palestinians' highest decision-making body.

A senior security official said Mr Qurie now ran the National Security Council, giving him control of Palestinian security bodies.

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