"Touching Yasser Arafat and his aides would see the unstoppable volcano of Palestinian anger erupt," warned the Al-Aqsa Martyrs Brigades, an armed offshoot of Arafat's Fatah faction.

"We tell the criminal (Israeli Prime Minister Ariel) Sharon: your people will pay dearly because a wave of martyrs will blow up everyone living in Israel," it added in a statement.

The Israeli security cabinet approved in principle to "remove" what it called the obstacle of Arafat, at emergency talks late Thursday in response to two suicide bombings earlier in the week which left 15 Israelis dead.

The announcement sparked a spontaneous outpouring of support for the 74-year-old leader as thousands of Palestinians took to the streets of the West Bank and Gaza Strip, and Arafat vowed he would never be taken alive.

"No one can kick me out. They can kill me with bombs but I will not leave," said Arafat, who made a triumphant return to the Palestinian territories in 1994 on the strength of the Oslo peace accords the year before.

Hundreds of gunmen opened fire into the air in Gaza City, shouting "Sharon go to hell", "Abu Ammar we will defend you forever" and "Revenge, Revenge".

Israel's decision was also condemned by key global players, with the United States, France and Russia, three backers of the Middle East peace "roadmap", speaking out firmly against any move to expel Arafat.

A senior US administration official said Washington will not work with Arafat, but opposed expelling him because that would only give him "a wider international stage."

"Our position on this is well known, longstanding and unchanged," the official told AFP on condition of anonymity. "It is unhelpful and it is not the solution."

UN Secretary General Kofi Annan said it would be unwise to expel the veteran Palestinian leader, while the European Union said it would be a huge mistake.

"We believe that would be a terrible mistake that would have serious consequences across the whole region," said Diego Ojeda, a spokesman for EU external relations commissioner Chris Patten.

The Arab League also said expelling Arafat would be disastrous, and there were numerous calls around the region for countries to intervene to prevent his removal.

Arafat himself was standing firm in his West Bank headquarters in Ramallah where he has been holed in for 20 months.

Israeli officials quoted by military radio said Aarfat's immediate expulsion was not on the cards, as they were awaiting the green light from Washington.

Amid fears Israel's decision could spark a dangerous escalation in the cycle of violence across the region, US Ambassador Dan Kurtzer met Friday with Israeli Defence Minister Shaoul Mofaz.

Mofaz is due to visit Washington next week for high-level talks, defence ministry officials said.

Israel, which has staged a series of air strikes against Hamas in Gaza recently, has accused Arafat of giving approval to militant attacks in the three-year Palestinian intifada. More than 3,450 people have died in that time, mainly Palestinians.

Palestinian prime minister-designate Ahmed Qorei threatened to call off efforts to form a new government after the Israeli decision, saying the move would make the composition of a government an "issue without substance".

Qorei agreed to accept a nomination from Arafat to become prime minister on Wednesday. Plans for him to be installed along with his new cabinet on Thursday were postponed after disagreements over its make-up.

A public opinon poll by the independent Dahaf Institute published Friday said that more than one in three Israelis wanted to see Arafat killed.

When asked "what should be done with Arafat," 37 percent replied that he should be "liquidated." Another 23 percent opted for expelling Arafat from the Palestinian territories.