RAMALLAH, July 17: Palestinian Prime Minister Ahmed Qorei submitted his resignation on Saturday after complaining of chaos in Gaza following kidnappings by gunmen demanding an end to corruption in the security forces.

But President Yasser Arafat rejected Qorei resignation and ordered a security shakeup in Gaza, where the troubles added to fears of mayhem ahead of a planned Israeli withdrawal.

Veteran guerilla leader Arafat is under increasing pressure at home and abroad to trim a jumble of forces and remove officials accused of graft, but such changes may whittle away his powers and little came of previous promises of reform.

Speaking after a cabinet meeting, Prime Minister Qorei appeared to suggest his resignation was not final if he got what he wanted. Cabinet member Azzam al-Ahmad said "there would be a new position" if Arafat's moves proved satisfactory.

"There will be another meeting on Monday to see where we stand," Qorei told reporters.

A sense of growing anarchy gripped the Gaza Strip, where kidnappers demanding an end to corruption in the security services briefly held four French aid workers and two local officials, including the area's police chief, on Friday.

All were released unharmed.

In apparent response to the gunmen's demands, Mr Arafat fired the police commander and appointed a cousin, Maj-Gen Mussa Arafat, as overall security chief for Gaza. He also announced its 12 security services would be combined into three.

But there was little sign it had appeased the kidnappers, while thousands of protesters marched in Gaza City to condemn the move. They said it would bring no change.

"No to corruption. Yes to reform and change," activists from Mr Arafat's Fatah group shouted as gunmen from the group's military wing, al-Aqsa Martyrs Brigades, fired into the air.

The abductions reflected a growing challenge to Mr Arafat from militants trying to strengthen their position before Israeli Prime Minister Ariel Sharon carries out a planned withdrawal of troops and settlers from the Gaza Strip by the end of 2005.

STATE OF CHAOS: Speaking to reporters in the West Bank city of Ramallah, before news of his resignation, Qorei said Gaza - where the Palestinian Authority declared a state of emergency - was in "an unprecedented state of chaos".

Some Palestinians worry lawlessness may only intensify as militant groups and security services jockey for position to fill the vacuum after any evacuation of Jewish settlements.

Israeli Justice Minister Yosef Lapid called Qorei's decision to quit "only a symptom of the disastrous situation caused by Arafat". Israel refuses to negotiate with Arafat, saying he foments bloodshed - an allegation he denies.

"If (Arafat) wasn't around, we could talk to (Qorei) and reach some arrangement that could be accepted by both the Palestinians and the Israelis," Lapid told Reuters.

Palestinian officials have said constant Israeli raids and military clampdowns have hindered Arafat's ability to make reforms or rein in militants.

A senior Arafat adviser told Reuters that the trouble in Gaza was a "conspiracy by parties that wanted to weaken the Palestinian Authority and show it is collapsing."

Qorei, also known as Abu Ala, took office in November. He was seen at the time as more likely to bend to Mr Arafat's wishes than his predecessor Mahmoud Abbas, who quit after losing a power struggle with the president.

Armed supporters of Mussa Arafat, who will retain his position as head of military intelligence in the Gaza Strip, fired in the air in Gaza City in celebration at his appointment as head of the national security forces in the area.

But thousands demonstrated against his appointment in the streets of Gaza City. The militants who had kidnapped police chief Ghazi al-Jabali condemned the president's move.

"With all due respect to President Arafat, the Palestinian Authority cannot remain to be monopolised by (Arafat) and his relatives," said Abu Iyad of the Jenin Martyrs Brigades. "We have our own ways to show our rejection."-Reuters