Israel does not want peace, does not want to stop settlement construction and does not want the two-state solution, Palestinian Authority President Mahmoud Abbas said on Sunday.

Addressing supporters during a rare visit to Bethlehem and Hebron, Abbas said that the Palestinians would not make any additional concessions and would continue to demand their rights.

"I don't know what the Israelis want," he said. "They must start thinking about what needs to be done if they really want peace."

Meanwhile, Hassan Khraisheh, deputy speaker of the Palestinian Legislative Council, called on Abbas to seriously consider dissolving the PA because of the failure of the peace process.

"This authority was created so that it could prepare for the establishment of a Palestinian state," Khraisheh said. "But after more than 15 years of thorough negotiations with Israel, this state still hasn't been established."

On Sunday, The Jerusalem Post, quoting senior PA officials, revealed that Abbas was already considering dismantling the PA, to protest Washington's failure to force Israel to freeze settlement construction.

Abbas said that he was not setting preconditions for resuming peace talks with Israel, but was only demanding the implementation of the road map plan for peace in the Middle East.

"We have accepted the road map and United Nations resolutions and we have fulfilled all our obligations toward the peace process," Abbas declared. "We have made big achievements regarding security and the economy [in the West Bank], while the Israelis haven't done anything."

He told the crowd that Jerusalem, Bethlehem and Hebron, with their mosques and churches, will forever remain Palestinian cities.

"No matter how much they [Israel] try to assault our holy sites and lands, we won't allow them to do so," he said. "Jerusalem will remain the eternal capital of the Palestinian people."

Abbas urged the Palestinians not to lose faith in peace, and to continue their efforts to achieve security, stability and independence.

He also lashed out at Hamas, accusing the Islamist movement of foiling Egyptian efforts to end the crisis with Fatah.

Abbas's visit to Bethlehem came amid renewed talk about tensions between him and PA Prime Minister Salaam Fayad.

A senior PA official said that Abbas was surprised to hear on Sunday morning from the Israeli media about secret understandings between Fayad and President Barack Obama over US recognition of Fayad's plan for an independent Palestinian state.

Such recognition would purportedly transform any Israeli presence in the West Bank and eastern Jerusalem into an illegal incursion, to which the Palestinians would be entitled to respond in self-defense.

A source close to Fayad said that no such secret deal had been reached with the Americans.

Fayad recently unveiled a detailed plan for creating a de facto state within two years. But many believe its undeclared intention is to unilaterally create a Palestinian state within two years.

Portions of Fayad's plan for statehood have been welcomed by the Israeli government because of its emphasis on building infrastructure and bolstering the Palestinian security forces as well as its economy.

But Israel has opposed any move by the Palestinians to unilaterally declare a state, nor does it believe that America would support such a move.

Speaking last week at the Jerusalem Center for Public Affairs, Deputy Foreign Minister Danny Ayalon addressed the veiled threat of a unilateral Palestinian declaration of statehood when asked about Fayad's plan.

"The emergence of a Palestinian state will only be the result of consensus and successful negotiations," Ayalon said. He added that he believed the two-year time line was unrealistic.

A Foreign Ministry official told the Post on Sunday that the US administration does not favor unilateral moves and has very clearly called on both Israelis and Palestinians to resume negotiations.

"A negotiated peace is the only game in town at the moment," the Foreign Ministry official said.

The senior PA official told the Post that Abbas was "unaware" of any secret deal between Obama and Fayad.

"The Americans should know that Fayad is the prime minister and not the president," the official said. "Any attempt to bypass President Abbas will fail, because he's the only address."

A Fatah operative closely associated with Abbas said that there is growing concern among Fatah leaders that the US was trying to "replace Abbas with Fayad."

"There's a feeling that the Americans have reached a decision to turn Fayad into the president of the Palestinian Authority," the Fatah official said. "This has created tensions between the two men."

Azzam al-Ahmed, a senior Fatah official and Abbas loyalist, said that his faction considers Abbas the only suitable candidate to lead the Palestinians.

"There is no substitute for President Abbas," he said, in a clear message to the US.

He also did not rule out that possibility that Abbas would postpone the elections slated for January 24, due to the ongoing crisis with Hamas.

Sources in Ramallah noted that Fayad had not come out strongly in support of Abbas after the latter's announcement that he would not run in the next elections. Unlike many senior PA and Fatah officials, Fayad has refrained from making a public appeal to Abbas to reconsider his decision.

Meanwhile, Hamas announced that Fayad does not have a mandate to reach any agreement on behalf of the Palestinians. Hamas spokesman Sami Abu Zuhri condemned Fayad as a tool in the hands of the Israelis and Americans.

"Fayad does not represent the Palestinian people," Abu Zuhri said. "His ideas are aimed at covering up for the failure of the so-called peace process."

But Dan Diker, a senior analyst for the Jerusalem Center for Public Affairs, said he believed that it would be Abbas who would unilaterally declare a Palestinian state somewhere in the next 16 to 20 months, since Fayad lacked the authority to do so.

He has threatened to resign now because he wants to make sure that the US is behind him when he does, said Diker, who is convinced that the US would indeed back Abbas at that moment.

Former Israeli ambassador to the US Zalman Shoval told the Post that a unilateral declaration of statehood would "immediately put an end to the peace process."

He added that it "would make null and void" all past agreements between Israel and the Palestinians, including those regarding security.

"It should be a major effort of Israeli foreign policy to avoid [unilateral statehood] and to make it clear that Palestinian statehood must be based on mutual agreements," said Shoval.

While he did not believe the US would support such a move, he said, "we should not ignore that something might be in the works from that point of view. The fact that it appeared in the press this morning, might indicate that there was an active effort on the part of someone to make this an issue, perhaps as a threat to Israel."

A Jerusalem official said that the Palestinians were not ready for statehood at this time, but that any threat of unilateral action on their part could be actualized in two years.

In the interim, the official said, the obvious strategy to combat this is to negotiate with the Palestinians.

It is a move that Israel, the US and the international community supports, the official said.