There is the Central Committee and the Revolutionary Council, the Old Guard and the Young Guard. There are the insiders, the outsiders, the cell leaders, branch chiefs and district heads. And there is the Office of Mobilization and Discipline, also known as the Office of Indoctrination.

Fatah, the core of the Palestinian national movement for five decades, has the organizational transparency of a Soviet republic and was long run like one by its founder, Yasir Arafat. Talk of reform arose after his death five years ago and again when Hamas defeated it in legislative elections in 2006.

But shock after shock has done little to induce change. The movement has been paralyzed by competing personal alliances and a continuing identity crisis, and has not held a congress in 20 years. While the gap between the Fatah-led West Bank and the Hamas-led Gaza is widely recognized, less appreciated is that Fatah itself, which the West trains and helps, is so internally torn that it is scarcely able to negotiate or govern.

On Tuesday, Prime Minister Salam Fayyad announced a new government with greater Fatah representation among the ministers but little change in policy.

“We are on a sinking ship, and the leadership thinks it can save us by plugging a hole,” lamented Qaddoura Fares, a leading Fatah advocate of change and peace with Israel. “We have to wake up and stop lying to ourselves. We call ourselves a democratic movement, but what democratic movement hasn’t met in 20 years?”

If he and others succeed and Fatah reorganizes itself and successfully takes on Hamas in elections planned for 2010 in the West Bank and Gaza, prospects for a deal between Israel and a future state of Palestine could brighten considerably. But polls show that if elections were held now, Hamas would give Fatah a very close race.

“Fatah used to be a movement focused on armed struggle, but now we want to be an economic and social movement with good government that ends corruption and promotes democracy,” said Bassam Walweel, a political activist-turned-businessman who is also playing a role in trying to reshape the group. “We are committed to peace with Israel.”

The Palestine Liberation Organization has long been dominated by Fatah and includes some smaller factions. Hamas was created in the late 1980s and is not part of the P.L.O. But since taking the 2006 elections, it has become the rising force in Palestinian politics, prompting Fatah to think about reform. After a four-day battle in June of 2007, Hamas took over Gaza, and Fatah was left with the West Bank.

In the past year, each of 14 West Bank regions has elected a new Fatah chief, most of whom are college-educated and professionally engaged. They meet weekly and rotate the leadership to avoid power plays. In addition, Fatah has taken a lesson from Hamas, seeking to make an impact at a grass-roots level by opening a 24-hour satellite television station and providing free lunches and book bags for needy schoolchildren.

While most analysts and Fatah activists remain pessimistic that real change will occur soon, the continuing ferment for reform within is unmistakable.

Nearly every day in past weeks, Fatah activists have discussed ways to bring about the long-postponed congress aimed at producing new governing bodies and a fresh set of procedural and policy guidelines. The Palestinian president, Mahmoud Abbas, who is the head of Fatah, has promised activists that he would hold the congress on July 1 in the West Bank. Most predict that the deadline will be missed, but also agree that a congress is needed.

“It is highly unlikely that the congress can be postponed for long,” said Khalil Shikaki, a Ramallah-based political scientist and pollster. “It has to happen this year to prevent the Young Guard from revolting.”

Every element of the congress is a source of division — who attends, as well as when and where it should be held and what should be decided.

The new political activists, from within the West Bank and Gaza, want the number of delegates to run into the thousands, so that the aging leaders can be pushed aside. Many are hoping to elect Marwan Barghouti, who is in an Israeli prison, as the new leader. The membership committee, however, wants only 650 to be invited. Mr. Abbas has said the number should be around 1,500.

To hold the meeting in the West Bank, as Mr. Abbas wants, would be to strengthen the insiders, those in the West Bank and Gaza, as opposed to the outsiders, those living in places like Lebanon and Syria. But a West Bank venue also means that Israel, which controls the borders with the West Bank, would have veto power over which outsiders could come.

This poses a delicate dilemma for Israel. While it might in theory favor a strengthened and renewed Fatah as a future negotiating partner and Palestinian government, such an organization could also be more militant. It would also have to decide what to do about Mr. Barghouti if he were elected.

Many of the younger activists say that the men around Mr. Abbas are mistaken to take armed struggle off the table, especially after Israel’s attack on Gaza in January. At the same time, they say that if a deal were struck, they are the ones who could sell it to the street and make it stick.

“The current leadership doesn’t keep armed struggle as an option,” said Dimitri Y. Diliani, the Fatah spokesman for the Jerusalem area. “For us on the ground, we are in favor of political discourse to pursue national goals. But in case it doesn’t work in a certain time frame we should resort to other options, including armed resistance.”

If the congress were held in Egypt or Jordan, the authorities there could have undue influence over who attended and what was concluded.

The biggest question for Fatah is what exactly it stands for: whether to push for a unity government with Hamas or seek to defeat it; whether to accept compromise with Israel on issues like the Palestinian right of return, the borders of the new state and the status of Jerusalem.

For Israel and the United States, the problem is equally vexing. They have an interest in helping the nationalists to reform and hold their congress. But they also have to decide how much to help the new leaders, some of whom may end up becoming opponents if the peace negotiating process fails.