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Palestinian leader Yasser Arafat, the spearhead of an ultimately failed four-decade struggle for statehood, died at the age of 75, plunging the Middle East into a new era of uncertainty.

"Our president, our leader, the holder of the flag to the new future, brother Yasser Arafat, passed away at 4:30 this morning (0230 GMT)," Tayeb Abdelrahim, the head of the Palestinian Authority leader's office, told reporters outside Arafat's Muqataa headquarters.

"The Palestinian leadership mourns with our people, with the Arab nation, with the whole of humanity, (the loss of) the tutor, the leader, the son of Palestine, its symbol, the builder of its modern nationalism and the hero of its battle for freedom and independence," he said Thursday.

Arafat had been critically ill in the Percy military hospital outside Paris since being airlifted to France on October 29 from the West Bank headquarters where he had been kept under virtual house arrest by Israel for almost three years.

He had been in a coma since the middle of last week and had been placed on a life support machine but the exact cause of his death is still unknown.

Officials in France said his body would be flown to Cairo from a military airport near Paris late Thursday afternoon. A funeral will be held in the Egyptian capital on Friday while his burial will follow in the grounds of the Muqataa.

Born in 1929, Arafat, probably the world's best known guerrilla leader who was almost never seen without his trademark chequered keffiyeh or headdress, was regarded as a terrorist by some, a freedom fighter by others.

He won the Nobel peace prize 10 years ago after signing the Oslo peace accords but the peace process collapsed four years ago with the launch of the Palestinian intifada or uprising against Israeli occupation.

Israeli Prime Minister Ariel Sharon and US President George W. Bush, who had dismissed Arafat as an obstacle to peace, described his death as major turning point in the region's history as the Palestinians put a new divided leadership structure in place.

Palestinian officials said Arafat's death would be marked by a 40-day official mourning period. The Palestinian flag flew at half-mast at the Muqataa and television broadcast verses from the Koran, the Muslim tradition on the death of leading figures.

The Palestinian leadership moved swiftly to divide the spoils of Arafat's power, as parliament speaker Rawhi Fattuh was installed as caretaker leader of the Palestinian Authority for 60 days, after which new elections must be held.

Former premier Mahmud Abbas was installed as head of the Palestine Liberation Organisation (PLO) while the PLO's Tunis-based politburo chief Faruq Qaddumi was surpringly named as head of the dominant Fatah faction. Prime minister Ahmed Qorei was to stay on as head of government.

At his swearing-in ceremony in parliament, Fattuh hailed Arafat as the "father of Palestinian nationalism -- the first fighter and a great martyr."

Prominent Palestinian MP Hanan Ashrawi said Arafat's death would usher in a new era for the region but insisted it would not be the cue for an outbreak of chaos.

"It's a transition for the whole region. It's a passing of an era," she said. "He was not your ordinary leader. It will never be the same but nobody is going to fall apart. We will persist."

Amid fears that Arafat's death could trigger an outbreak of violence, the Israeli army imposed a total security clampdown on the West Bank.

Reinforcements were deployed around towns and Jewish settlements in the West Bank while police reinforcements were also put in place in east Jerusalem to head off any violence linked to Arafat's death.

Fears of violence were underlined when the radical Al-Aqsa Martyrs Brigades, an armed offshoot of Arafat's Fatah movement, urged its fighters to attack Israel to avenge the "Zionist assassination".

The overall leader of the Islamist movement Hamas, Khaled Meshaal, also pointed the finger at Israel and accused it of killing the peace process.

"I accuse Israel of having poisoned the blood of Abu Ammar," Meshaal told Al-Jazeera. He claimed doctors had been unable to detect the toxin.

"By killing Arafat today, Israel has killed the peace process. It has killed he who created with it this process," he said.

As Palestinians digested news of his death, several hundred people were allowed inside the Muqataa where a book of condolence had been opened.

"Where have you gone Abu Ammar (Arafat), why have you left us," wept 55-year-old Umm Ahmed as she sat inside the battered compound.

"We have lost our most valuable possession. He was our most dear leader."

Others marched through the streets of Ramallah, chanting: "With our soul, with our blood, we will support you Abu Ammar".

Thousands also took to the streets of Gaza, unleashing volleys of gunfire into the air and setting fire to tyres, turning the air pitch black.

Israel, which has long accused Arafat of being the main obstacle to peace in the Middle East, did not try to mask its delight at his death.

"The sun is shining in the Middle East and around the world, as Arafat was not only the leader of terrorism against Israel, but also the founding father of the terrorism that is running rampant around the world right now, including that of Al-Qaeda," Justice Minister Tommy Lapid said.

Sharon himself said that "the death of Arafat could mark a historic turning point for the Middle East."

"We hope that the new Palestinian leadership that succeeds him will understand that progress in relations with Israel and solutions to problems must come first and foremost through a war on terrorism," the premier added.

Bush, who has previously dismissed Arafat as a failure, said he hoped his death would lead to an upturn in Palestinian fortunes.

"For the Palestinian people, we hope that the future will bring peace and the fulfillment of their aspirations for an independent, democratic Palestine that is at peace with its neighbors," Bush said in a statement.

French President Jacques Chirac led the tributes, calling Arafat "a man of courage and conviction who for 40 years incarnated the Palestinians'' fight for recognition of their national rights."

UN Secretary General Kofi Annan said Arafat had "expressed and symbolized in his person the national aspirations of the Palestinian people".

"The best tribute to president Arafat's memory will be to intensify our efforts to establish a peaceful and viable state of Palestine," said EU foreign policy chief Javier Solana.

It says, "Peace be upon you."

 As Salaam Alaikum

R.I.P.  Yasser Arafat