President Mahmoud Abbas chairs talks in Jordan on Thursday with factions of Fatah, seeking agreement to hold the first congress in 20 years of the fractured, weakened movement dominating Palestinian politics.

Fatah needs to restore unity to overturn its shock 2006 election defeat by Islamist rival Hamas, and to ensure Abbas is firmly in the driver's seat for peace talks with Israel, which U.S. President Barack Obama wants to resume without delay.

"The meeting of the central committee that will take place in Amman will take the final steps in preparation for the Sixth Fatah Congress," said Fatah West Bank spokesman Fahmi al-Zarir.

A senior aide to Abbas told Reuters the meeting stood a good chance of setting a final date and venue for the congress, last held in 1989 but never yet convened on Palestinian territory.

The aim is to strengthen Abbas by restoring and rejuvenating Fatah, instituting reforms to bolster its democratic credentials and heal rifts in the ranks between the exiled establishment and home-based veterans of the resistance movement.

Secular Fatah is internally divided on issues of militancy, democratisation, and the conduct of talks with Israel. Local and younger leaders want the "old guard" to grant them more say.

"The differences within Fatah could lead to division and fragmentation of the movement. What's happening is a recipe for the collapse of Fatah," said reformist Qaddoura Fares.

Once all-powerful under the late Yasser Arafat, Fatah began to show cracks after his death, running rival slates in the 2006 election and thereby helping its opponent Hamas to a victory that led on to open division and armed hostility.

A year later Fatah was forced out of the Gaza Strip by the Islamists and holds sway only in the occupied West Bank. Months of talks in Cairo to reconcile the two divergent wings of the Palestinian cause have so far made little progress.

"Arafat had contributed to weakening Fatah but he was the glue that held the movement together. Now everyone sees himself as leader," commented political analyst Hani Masri.

STRENGTHENING ABBAS'S HAND

Abbas, 74, wants a "modern, united and tamed Fatah" -- as opposed to the militant Hamas -- to prove he can deliver peace as head of the Palestinian Authority.

But his Fatah movement must restore credibility with Palestinians disaffected by its corruption and cronyism, and the meagre results of past peace talks with Israel.

The Hamas Islamists, with a reputation for austerity, spurn talks in favour of armed resistance against Israel and now represent Abbas's most serious challenge.

A strengthened Abbas could win greater U.S. and European support in pressing Israel's right-leaning government to endorse the internationally backed "two-state solution" to the conflict.

Abbas wants the movement's 1,550 members to grant wider representation to the younger generation. Congress would chose a new Central Committee and Revolutionary Council -- titles reflecting Fatah's birth in the Cold War geopolitics of 1965.

The choice would pit reformists who grew up fighting, then talking to, Israeli occupiers against veterans who stayed in the privileged diaspora until establishment of limited Palestinian self-rule in mid 1990s.

Five previous Fatah congresses were held in the diaspora and rarely presented leaders from the territories. Some current central committee members oppose holding the sixth congress in the territories, in case new blood challenges their hold.

"They want the same old faces," said Fares.

Wherever the congress meets, rationalising the future course of Palestinian liberation policy will be the dominant topic.

Like Hamas, Fatah's existing charter does not recognise Israel and endorses "armed struggle" to liberate Palestinian territories.

But the charter of the Palestine Liberation Organisation, of which Fatah is the backbone and Hamas is also a member, long ago nullified the call for Israel's destruction.