Yasser Arafat nominated the speaker of the Palestinian parliament, Ahmed Qureia, last night to be prime minister and oversee a crumbling peace process further jeopardised by pledges by Ariel Sharon and Hamas to destroy each other.

Mr Qureia quickly received the approval of top Palestinian bodies, while the European Union also said it accepted his nomination as replacement for Mahmoud Abbas, who quit at the weekend.

Mr Abbas said yesterday he would not go back on his resignation, to bitter denunciations of Israel, America, and Mr Arafat for undermining his efforts to establish peace.

Mr Qureia, popularly known as Abu Ala, was an architect of the Oslo peace accords 10 years ago and is considered a pragmatist. He has been the speaker since 1996.

Some Israeli officials say he is acceptable to the government because he has been willing to stand up to Mr Arafat in the legislature's drive for political reform and combating corruption.

But the crucial issues of division of powers, and who controls Palestinian security forces, will ultimately determine whether Israel regards him as suitably detached from Mr Arafat.

Mr Sharon and Washington have accused Mr Arafat of blocking the road map peace process and said they will not deal with any prime minister under his control.

Last night, sources in Ramallah said the possibility of Mr Abbas quitting was discussed between US officials and the Palestinian Authority in Washington more than a month ago.

At the time, the Americans expressed a preference for Mr Qureia as successor. The US secretary of state, Colin Powell, said yesterday that a future prime minister must take full control of all Palestinian forces, a principal cause of the confrontation between Mr Abbas and Mr Arafat, and receive the political support to "go after terrorist organisations".

But while Mr Qureia is respected by Palestinian politicians, many question whether he will be any better able to succeed than Mr Abbas without greater US pressure on Israel to curtail attacks in the occupied territories and bolster Palestinian support for the road map by easing the hardships of occupation.

The White House continued to insist yesterday that the peace plan was still viable.

But its prospects looked increasingly dim alongside the threats which Mr Sharon and Hamas have been making to destroy each other. Last night, Israeli helicopters fired two missiles at the home of a Hamas militant in the Gaza strip, wounding at least 11 people.

That strike came a day after Israel attempted to assassinate Hamas's spirtual leader, Sheikh Ahmed Yassin, in a jet fighter attack on a Gaza apartment authorised by Mr Sharon. The missile hit the wrong floor and Mr Yassin escaped with minor injuries.

Hamas said Israel had "opened the gates of hell" and Mr Sharon was a priority target. The Israeli prime minister countered by telling the news paper Yedioth Ahronoth that Hamas leaders were "marked for death", and that his forces would keep up the hunt for them.

The Israelis have been expecting a retaliatory attack by Hamas since helicopter gunships killed Ismail Abu Shanab, a deputy to Mr Yassin, last month. It has yet to come, and it is not clear whether this is because a succession of Israeli assassinations has weakened Hamas's ability to strike back or it has held back in the hope of reviving the ceasefire.

Israeli officials declared a heightened state of alert, imposing additional checkpoints on routes into main cities.

As the Palestinian crisis deepened, there were calls from Israeli politicians for Mr Arafat to be driven into exile.

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