Palestinian leader Yasser Arafat appointed his longtime deputy Mahmoud Abbas as prime minister Wednesday, a senior official said, marking the first time that Arafat has been forced to share power.

Arafat sent a letter to Abbas, the No. 2 in the PLO, asking him to form a new Cabinet, said Palestinian Cabinet minister Saeb Erekat. Abbas, widely known as Abu Mazen, has five weeks to complete the task.

Also Wednesday, gunmen from a Palestinian militant group killed an Israeli motorist near a Jewish settlement in the northern West Bank.

Arafat agreed to appoint a premier under intense international pressure but tried until the last minute to limit the powers of the new position. On Tuesday, the Palestinian parliament rebuffed Arafat's efforts to insert a clause that would have appeared to give him the final say over Cabinet appointments.

According to the legislation creating his post -- passed almost unanimously in votes a week apart -- Abbas has the authority to appoint the Cabinet and call it into session, and he is responsible for overseeing its functions.

"It's the beginning of a transition -- it is certainly a turning point and a qualitative shift in the political culture," said legislator Hanan Ashrawi. "Now we have power-sharing that is clearly spelled out."

Arafat remains the overall commander of Palestinian security forces and the broader "Palestinian leadership," a body that includes the Cabinet, PLO leaders and security commanders. Arafat also retains the final say in peace talks with Israel.

The United States and Israel demanded that Arafat be sidelined or neutralized, charging that he has not done enough to stop Palestinian attacks against Israelis during nearly 30 months of violence.

In Wednesday's shooting, a 50-year-old Israeli motorist from the Mevo Dotan settlement in the northern West Bank was shot in the head and died at the scene. The road where the attack occurred reportedly is known for drive-by attacks against settlers.

Al Aqsa Martyrs' Brigade, a militia linked to Yasser Arafat's Fatah movement, claimed responsibility, saying the shooting was a reprisal for the killing of their leader, Yousef Masharka, last week. The circumstances of that killing were not immediately known.

The rebellious stance of the Palestinian parliament -- which started the reform wave by forcing Arafat's Cabinet to resign last June -- might help calm Israeli and U.S. concerns that Arafat still retains most of the power.

"We respond positively" to creation of the position, said U.S. Secretary of State Colin Powell, adding that "it seems that President Arafat will still retain authority over security and other matters, and we will have to see now whether the prime minister has the kind of authority that that we can view as authority."

On Friday, President Bush said installing a credible Palestinian prime minister with real powers is a prerequisite for unveiling a U.S.-backed "road map" to Palestinian statehood.

Arafat has been the unrivaled leader of the Palestinian movement since the 1960s, when he took control of the PLO. Returning to the West Bank and Gaza under interim peace accords in 1994, Arafat was elected president of the Palestinian Authority, the transition government, in January 1996 general elections, the only ones held in the Palestinian areas.

Palestinians reject Israeli and U.S. demands to replace Arafat and blame Israel's military operations for the continuing violence. In a series of incursions, Israel has retaken most of the Palestinian areas in the West Bank. In Gaza, Israeli troops invade Palestinian towns and refugee camps almost nightly, destroying houses, arresting suspected militants and clashing with gunmen.