Western-backed Palestinian President Mahmoud Abbas says he does not want to run for re-election in January.
In a televised speech, Mr. Abbas accused the United States of backtracking on demands that Israel freeze settlement expansion. He said all settlement construction in the West Bank and East Jerusalem must stop and he has made this a precondition for resuming peace talks.
Palestinian chief negotiator Saeb Erekat says the President is frustrated.
"Palestinian factions have reiterated that they want President Abbas to be their candidate," said Saeb Erekat. "But at the end of the day, it's not the presidency; it's the question of the Israeli government continuing settlement activities, fait accompli policies, dictation."
President Abbas's announcement complicates U.S. efforts to revive peace talks. Mr. Abbas, who rules the West Bank, is seen as a moderate alternative to the violent Islamic militant group Hamas which controls the Gaza Strip. And he does not have a successor.
But the careful wording of his statement left open the possibility that Mr. Abbas could be persuaded to change his mind. He received phone calls from Israel's president and the leaders of Egypt and Jordan urging him to remain in his post for the sake of peace.
Analysts say Mr. Abbas's threat to quit may be a means of goading the U.S. to put further pressure on Israel for concessions.