Palestinian President Mahmoud Abbas appointed independent legislator Salam Fayyad today to serve as prime minister of an emergency government which has been rejected by Hamas.
Mr Fayyad, who has twice served as Palestinian finance minister, enjoys Western backing and controls a Palestine Liberation Organisation (PLO) account that could be used to fund the emergency government.
His appointment comes as Hamas fighters and looters ransacked the Palestinian presidential compound in Gaza after routing their secular rivals from the President's Fatah faction.
With Gaza effectively a new independent entity under Hamas control, Western powers and Russia tonight gave a "clear message of support" to Mr Abbas.
They committed to advancing financial aid to his administration having cut it off a year ago when Hamas - which refuses to recognise Israel's right to exist - won last year's general election.
Hamas said Palestinian security forces, now under its command, would take control of Gaza's crossing with Egypt, which was monitored by European observers until the last decisive battle for Gaza erupted earlier this week.
In Gaza, Prime Minister Ismail Haniyeh refused to accept his dismissal and set about restoring order after six days of battles that ended in revenge killings and looting.
Fatah security chiefs arrested by Hamas in Gaza and accused of staging a "coup" were given "amnesty" - a possible sign Hamas leaders want to show restraint and statesmanship.
Ten Fatah security chiefs were released later this morning, according to witnesses. The men were reportedly handed over to a Fatah leader in Gaza whose faction did not join this week's factional fighting.
"I demand that all our people show calm and self-restraint," Mr Haniyeh said after their release.
He ordered the police, largely absent during the faction fighting, to ensure the rule of law in a territory long racked by complex clan rivalries where Islamist fringe groups inspired by al Qaeda have recently become active.
Mr Haniyeh also called on foreign powers to respect the result of the elections. "No internal formula in the Palestinian territories will hold without national agreement and without respecting the legitimacy of the election," he said.
It was also revealed that his officials were in advanced negotiations for the release of BBC reporter Alan Johnston who was abducted last March.
Green Hamas flags flew over the compound as it was stripped of anything moveable following its capture last night. Portraits of Mr Abbas and his predecessor, the late Yasser Arafat, lay on the ground.
Hamas fighters showed reporters pools of blood where they said two of Mr Abbas's guards shot themselves rather than surrender. A Fatah official said they were killed.
Fatah holds control of the larger West Bank but after six days of conflict, the two Palestinian territories now stand divided by a political gulf wider than the 30 miles of Israel that separates them physically.
Meanwhile, former prime minister Ehud Barak will be named Israel's defence minister next week in a reshuffle rushed through in response to the Gaza fighting.
Seven Facts About Salam Fayyad
Born in 1952 in the West Bank village of Deir al-Ghosoon, near the town of Tulkarm.
The pro-Western economist was finance minister from 2002-2005. He worked for the World Bank from 1987-1995 and was the International Monetary Fund representative to the Palestinian Authority from 1995-2001.
As finance minister, the US-educated Mr Fayyad initiated major reforms of the financial system that won international praise. He also worked hard to curb official corruption.
He resigned in late 2005 to run as a founder of the Third Way party in Palestinian parliamentary elections. The party did poorly against the long dominant Fatah faction and also the Hamas Islamist movement, winning only two seats.
He rejected overtures from Hamas to become prime minister after the Islamists stunned Fatah to win the parliamentary elections. Mr
Fayyad said he presented several conditions, including that Hamas recognise Israel, which the group rejected.
Shortly after taking office in March 2006, Hamas said it inherited a bankrupt Palestinian Authority and more than €1 billion in debt.
He was pressured to accept the position of finance minister when Hamas and Fatah agreed in Mecca, Saudi Arabia, to form a unity government in March 2007.