The Palestinian cabinet has resigned en masse rather than face defeat in a vote of no confidence in parliament.

Palestinian leader Yasser Arafat had accepted the resignations, said Cabinet Secretary Tayeb Abdel Rahman.

Arafat's decree failed to halt no-confidence vote

Correspondents said the cabinet had faced almost certain defeat in Wednesday's vote as most Palestine Legislative Council deputies believed that Mr Arafat had not done enough to meet internal and international calls for reform.

The BBC's Peter Biles says Wednesday's events mark the first time the Palestinian parliament has opposed Yasser Arafat in this way and they represent a serious personal blow to the Palestinian leader's authority.

Mr Arafat added five new ministers in a reshuffle in May but analysts said the reforms failed to quell the belief among many MPs that many ministers were either incompetent or corrupt.

Two-week deadline

The Palestinian parliament was meeting at Mr Arafat's headquarters in Ramallah, still surrounded by the Israeli Army.

The resignations - after most of the legislators who spoke had indicated that they would not give the cabinet their approval - were seen by analysts as a way of preventing embarrassment for Mr Arafat.

The Palestinian leader must now present a new cabinet to parliament within two weeks.

"There is a crisis of trust," said lawmaker Salah Taameri, of Mr Arafat's Fatah movement.

Our aim was to topple the government and the government now is toppled

Palestinian legislator

Minister Saeb Erekat said: ''The ministers consulted each other and decided for the benefit of the Palestinian people to submit our resignations to President Arafat to enable him to form a new cabinet and to be able to submit it to the council.

"Today will be viewed as a landmark of the Palestinian people's history," he said.

One legislator said: "Our aim was to topple the government, and the government now is toppled."

Election plans

Earlier on Wednesday, Mr Arafat set parliamentary and presidential elections for 20 January next year.

The announcement virtually turned his administration into a transitional government that officials argued made any vote of confidence void.

However, lawmakers insisted that even a temporary government would have to accept the results of a ballot, and ministers felt they had to resign rather than face the public humiliation of a defeat.

First parliamentary challenge of its kind to Arafat

Palestinians last held elections in 1996.

Our correspondent says it is hard to see how there can be open democratic elections in just four months, given the military restrictions still imposed on Palestinians.

But he says the announcement of a date for the election could be used to try to push Israel to allow more freedom in Palestinian areas leading up to the vote.

US President George W Bush has urged the Palestinian people to drop Mr Arafat and bring in new leaders uncompromised by "terrorism".