Yasser Arafat won a tough political battle Tuesday as the Palestinian parliament approved his new 19-member Cabinet despite dissenters demanding more sweeping reforms and limits on the authority of the Palestinian leader.

Just a few miles away in Jerusalem, Israeli Prime Minister Ariel Sharon was working to head off the potential collapse of his ruling coalition as the moderate Labor Party threatened to pull out.

Late Tuesday in the West Bank, a Palestinian infiltrated the Jewish settlement of Hermesh and opened fire, killing a young girl and wounding four other people, settlers and the military said. The infiltrator was shot and killed, they said. The wounded included another young girl.

After a day of heated discussions in the Palestinian parliament, legislators voted 56-18 to approve Arafat's new Cabinet, providing him with a rare success. In recent months, he has faced repeated sieges by the Israeli army at his Ramallah compound and increasing criticism by fellow Palestinians.

"I'm proud of the Palestinian democratic process. This is a victory for the Palestinian people," Arafat said. "It is a step toward reform."

Several hours earlier, the Palestinian leader flashed his anger when legislators questioned whether the new Cabinet, filled with many longtime Arafat associates, would be effective in finding a way out of the current battle with Israel.

"I don't think this Cabinet can lead the Palestinians out of the crisis," said legislator Ziad Abu Amr. An angry Arafat tried to silence him, shouting: "You are not allowed to talk about the members of the executive committee, you are not allowed!"

Palestinian TV, which broadcast part of the proceedings live, did not show the heated debate before the vote.

Naming a new Cabinet was a key reform measure expected of the Palestinians in a new U.S.-backed peace plan. The Cabinet has only four members who have not served in previous Cabinets, and critics said some of those suspected of corruption remain in their posts.

The most important addition to the Cabinet is Hani al-Hassan, the interior minister who is to oversee the restructuring of the security services, which consist of about a dozen overlapping agencies.

Israel wants the Palestinian security forces to prevent attacks against Israel. However, al-Hassan said, "my goal is to protect the Palestinian people. This is my only task."

Last month, rebellious legislators from Arafat's Fatah movement forced the Cabinet to resign in what was seen as the most serious challenge in Arafat's eight years at the helm of the Palestinian Authority.

Palestinian lawmakers demanding reforms said they suffered a setback when Israel carried out a 10-day siege of Arafat's headquarters in September, a military action launched after a deadly homicide bombing in Israel.

The siege boosted Arafat's flagging popularity, and his Palestinian critics dropped a demand that he name a prime minister to share power. In recent meetings with legislators, Arafat portrayed a vote against his Cabinet as a show of support for Israel and the United States, which has also sought broad reforms.

In a speech to parliament Tuesday, Arafat said he is committed to reform, but suggested it would not be as sweeping as sought by the United States. He criticized Israeli military strikes against the Palestinians, but said he was prepared to pursue peace talks.

"The uprising of the people and its rejection of the (Israeli) occupation and settlements doesn't mean a rejection of comprehensive peace," Arafat said.

Meanwhile, a growing Israel dispute over the Jewish settlements in the West Bank and Gaza is threatening Sharon's coalition government and could force early elections.

The moderate Labor party, the largest faction in the government, says it will vote against the 2003 state budget on Wednesday to protest what it views as excessive spending on settlements.

Sharon has said he will force out any party that votes against the budget, and would try to form a narrow coalition of right-wing and religious parties.

But Sharon's coalition chairman, lawmaker Zeev Boim, said "the more realistic scenario is that there will be no choice for the prime minister but ... to seek early elections within 90 days."

Sharon's Cabinet secretary, Gideon Saar, said a new U.S.-backed peace plan is not acceptable in its current form. Israel objects because it is based in part on an Arab proposal calling for an Israeli withdrawal from all occupied lands and affirming the right of return of Palestinian refugees.

Saar's comments marked the first time an Israeli official said outright the proposal was unacceptable without major changes.

In overnight military strikes, Israeli troops killed Assem Sawafta, 19, a member of the Islamic militant group Hamas, in a raid in the West Bank town of Tubas.