Jerusalem: Dozens of armed Palestinians, calling for "real" reforms, today (July 18, 2004) stormed the intelligence service office of Palestine Authority (PA) in southern Gaza Strip and released prisoners held there, in protest of Chairman Yasser Arafat's appointment of his cousin as head of security services.

The gunmen opened fire on security and guards inside the complex, smashed furniture and burnt down the one storey building in the southern Gaza Strip town Khan Yunis, witnesses said, calling it a "frontal confrontation" with Arafat from inside his Fatah party.

The weekend of crisis and chaos in the Palestinian Authority mired in a spate of kidnappings, demonstrations and protests against reforms, prompted Prime Minister Ahmed Qureia to tender his resignation to Chairman Arafat, who refused to accept it today.

"I totally reject your resignation and consider it nonexistent," Arafat told Qureia at a meeting in Ramallah.

Qureia told his Cabinet yesterday he was firm in his decision to quit. Israel Army Radio, quoting associates of Qureia, today said that he did not intend to rescind his resignation, a situation that can further complicate the chaotic situation.

The strike purportedly carried by Yasser Arafat's Fatah party affiliated armed group, the Al-Aqsa Martyr's Brigade, followed protests by thousands of Palestinians who took to the streets in Gaza City last night.

The protesters, many of them armed, chanted and carried banners against the reforms of the security organisations decreed by Arafat earlier, notably the nomination of his relative Moussa as the head of the Palestinian security forces.

The nomination of Moussa has sparked an almost unprecedented criticism from officials, seen as a direct challenge to the authority of Chairman Arafat.

Palestinian deputy cabinet minister, Sufyan Abu Zaida, said Moussa Arafat was considered one of most corrupt officials in the Authority.

Palestinians will not accept the nomination, and unrest in Gaza will only grow, Abu Zaida told Army Radio.

"This is infuriating," Abu Zaida said. "This shows disregard for people and their opinions. This is intolerable disregard, and in Gaza, thousands will rise up against this decision."