A senior Israeli defense official on Friday challenged the Palestinian Authority to slam shut the open border between Gaza and Egypt, saying its credibility was on the line over its failure to stop the flow of gunrunners and others across the frontier.

Israel and the Palestinian Authority (search) have both said they fear Al Qaeda terrorists will infiltrate Gaza through the open Gaza-Egypt border, where Palestinians and Egyptians have been crossing with virtually no border controls since Israel completed its withdrawal from Gaza on Monday.

Palestinian leader Mahmoud Abbas on Thursday said the border chaos had been brought under control to a "very high degree." But on Thursday evening, people were still crossing unfettered, though the numbers had dropped from previous days when thousands passed freely across the frontier.

Amos Gilad (search), head of the Defense Ministry's diplomatic and security department, said weapons had been smuggled across the porous border and the pace was likely to pick up if Palestinians failed to act quickly.

"The Palestinian authority is facing a supreme test of its credibility," he told Israel Army Radio when asked about the chaos along the border. "They look like they're running a system which has neither law nor order, neither organization nor authority."

Egypt has started deploying 750 border troops to secure its side of the frontier and prevent weapons smuggling. But so far, they have failed to halt the flow of people and arms, including hundreds of assault rifles and pistols. Gilad, however, said he believed the Egyptians would act.

"Egypt ... has to impose down to the smallest detail a regime of security ... to stop smuggling, to stop breaches of its sovereignty. As far as I understand the Egyptians they are determined to do that," he said.

Palestinian official Saeb Erekat (search) said the Israelis had caused the problem by not coordinating the Gaza pullout with Palestinians.

"Mr.Gilad knows very well that the whole thing was unilateral," Erekat told The Associated Press. "We had to pick up the pieces after they left without them even telling us when they were going to leave."

Prime Minister Ariel Sharon (search) last year announced a unilateral withdrawal from Gaza and part of the West Bank, saying the Palestinians could not be a partner to negotiations as long as they failed to prevent militant groups from attacking Israelis.

In a speech to a U.N. summit on Thursday, Sharon said Palestinians are entitled to their own state, and his country has no desire to rule over them. He urged reconciliation and compromise to end their conflict, but said that after the Gaza pullout, it was now up to the Palestinians to "prove their desire for peace" by putting a halt to terror and disarming militants.

"The Palestinians will always be our neighbors. We respect them and have no aspiration to rule over them," Sharon said. "They are also entitled to freedom, and to a national, sovereign existence in a state of their own."

Sharon's Likud party passed a resolution in 2002 opposing the creation of a Palestinian state and was also largely against the Gaza withdrawal.

Commentators on Friday saw the U.N. speech, made in Hebrew and broadcast live during Israeli prime time, as an indication of Sharon's intention to leave his divided party and seek a new, more centrist grouping.

"It sounded like the prime minister's statement of farewell to his party," Aluf Benn wrote in the daily Haaretz newspaper. "Sharon appeared to understand that he has no chance of winning in the Likud and must seek a new political way."

The Likud's governing central committee is to convene on Sept. 26 for what promises to be a stormy session. Former premier Benjamin Netanyahu (search) is expected to demand a date for primaries where he will challenge Sharon for party leadership.

Netanyahu seized on Sharon's speech to accuse him of abandoning his conservative party faithful and turning soft on the Palestinians.

"Sharon's speech proves that he turned leftward and will make more concessions," he said.