Critics accused Palestinian Prime Minister Salam Fayyad on Tuesday of exceeding his mandate and challenging President Mahmoud Abbas by declaring a goal of statehood within two years.

Fayyad, a former IMF economist, is far from popular with many in the Fatah party, the dominant faction of the Palestine Liberation Organisation (PLO) which, led by Abbas, is the strongest political force in the Israeli-occupied West Bank.

Senior members of Fatah, some of whom accuse Fayyad of undercutting their influence by shunning them from his cabinet and curbing subsidies and public-sector wages, said the prime minister was exceeding his brief on Monday by making a keynote speech on the future of peace negotiations with Israel.

Some also saw his address as a power play against Abbas.

"He is entitled to his political ambitions," one senior party official told Reuters on condition of anonymity. "But it's none of his business as prime minister to deliver such a speech. He has nothing to do with the negotiations (with Israel)."

Other senior figures made similar comments. Fatah spokesman Fahmy Zahrir said: "The Basic Law is clear that the prime minister's responsibilities lie in internal administration. It is clear external affairs are the responsibility of the PLO."

Another senior member of Fatah, which is grappling with its own internal divisions, said he suspected Fayyad of trying to raise his public profile in order to challenge Abbas.

PALESTINIAN SCHISM

Fayyad, who was elected to parliament for a small party and has limited popular support, has long denied such ambitions. A presidential election is due next year, though a schism between Fatah in the West Bank and Hamas Islamists in Gaza puts that in doubt.

There was no reaction to the speech from President Abbas himself. He appointed Fayyad, a former finance minister, to run the Palestinian Authority government in June 2007, replacing a Hamas-led administration after the Islamist group seized control of the Gaza Strip from Fatah-led forces loyal to Abbas.

Abbas has kept faith with Fayyad, re-appointing him last month after the premier tendered his resignation in a standoff with Fatah. A number of Fatah members entered the new cabinet, however, ending two years of mainly technocratic rule during which Fayyad had fostered the support of U.S. and European leaders for his reforms of the budget and security forces.

Some Fatah members are more favourable to Fayyad, whose address was billed as a response to similar speeches by U.S. President Barack Obama and Israeli Prime Minister Benjamin Netanyahu.

One supporter, Qaddoura Fares, said: "Fayyad is the prime minister of all the Palestinian people and we should remember that. Many people around the world will pay attention to him and hear what he says." Palestinian media reaction to the speech was muted.

Al-Ayyam newspaper, whose editor is a senior Fatah member, ran a brief report on its front page, but below the foreign news. It ran the text of the speech inside the paper.

Al-Quds newspaper, in an editorial, said Fayyad's call for Palestinian unity as crucial for negotiating statehood "must be supported by all Palestinian factions, especially Hamas".

The editor of government funded al-Hayyat said the speech was important "because it told us that completion of the institutions of a Palestinian state is at hand."