Hamas fighters overran key security strongholds of Abbas's Fatah faction across the chaotic territory, where at least 108 people have been killed in an explosion of internecine bloodshed in less than a week.

Abbas's decision to dismiss the unity government and Hamas prime minister Ismail Haniya and declare the state of emergency was announced at a Ramallah press conference by presidency secretary general Tayeb Abdelrahim.

He said Abbas would also hold new elections "as soon as the situation allows".

The international community voiced increasing alarm about the situation in Gaza, where fighting was raging around Abbas's seafront compound after Hamas fighters stormed Fatah bases across the territory, a radio station was set ablaze by bomb attack and power was knocked out in many areas.

"What is happening in Gaza is the second liberation of the Gaza Strip from the band of (Israeli) collaborators after the first liberation from the bands of settlers" in 2005, Hamas spokesman Sami Abu Zuhri told AFP.

In the deadliest showdown yesterday, Hamas gunmen stormed the preventive security force compound in Gaza City and hoisted the Islamist movement's green flag on the roof after an hours-long battle that left at least 14 dead and 70 wounded.

Fatah fighters loyal to Abbas, some stripped to their underwear, were dragged out of the building with their hands in the air as black-clad masked Hamas gunmen stood watch.

Islamist fighters prayed on the sidewalk while on the rooftop others fired rounds into the air to celebrate their latest victory in what one Hamas leader described as "a battle between Islam and heresy."

It is largest stronghold of pro-Fatah security services to fall to Hamas -- considered a terror outfit by the EU, Israel and the United States -- whose disciplined fighters had already overran positions in the south and the north, where it grabbed two more major Fatah compounds on Thursday.

Hamas's armed wing claimed to have executed a leader of the Fatah-linked Al-Aqsa Martyrs Brigades, amid unconfirmed reports of other killings of Fatah loyalists.

By early evening, Hamas was besieging the headquarters of the Fatah-controlled overall security apparatus in Gaza City and battles raged around Abbas's seafront compound, the crown jewel of Fatah positions.