The Hamas-led government withdrew a controversial 3,000-strong private militia from the streets of Gaza on Friday, saying it wanted to avoid further infighting with the rival Fatah movement.

The move came on the second day of talks with Fatah aimed at halting a flare-up in violence and finding a way out of the deadlock that has paralyzed the Palestinian government and frozen relations with most of the world.

The talks were focusing on President Mahmoud Abbas' demand that Hamas accept the idea of a Palestinian state alongside Israel. In a bold move, Abbas said Thursday he will hold a national referendum on the proposal if Hamas, which is committed to Israel's destruction, doesn't accept the plan within 10 days.

The black-clad Hamas militia, deployed last week, has been at the center of growing tensions in Gaza that have left many fearing all-out civil war. Ten people have been killed in Fatah-Hamas clashes over the past week, and a senior commander from Fatah was seriously wounded in an assassination attempt.

Hamas officials said they were not disbanding the unit, only removing it from public areas to avoid friction. The gunmen were not in sight Friday, and the streets of Gaza City were quiet.

"We are complying with orders," said Youssef Zahar, a leader of the militia.

He said Interior Minister Said Siyam, a top Hamas official, ordered the forces to gather in six centers and provide assistance to regular police forces, which are dominated by Fatah, if requested. He said the unit also would conduct its own patrols, but did not say when this would happen.

The decision signaled a concession by Hamas, which only days earlier said it had no intention of withdrawing the force. Fatah officials have accused the "black militia" of spearheading a coup against the president.

Tensions have been steadily rising since Hamas defeated Abbas' Fatah party in January legislative elections.

Abbas, elected separately last year, has been seeking to counter Hamas' power, removing authority over security forces from the Hamas-controlled Interior Ministry and asserting that he has the authority to conduct peace negotiations with Israel.

In response, Hamas formed the new security unit in defiance of Abbas. Further enraging Abbas, it appointed as head of the unit a senior militant high on Israel's most-wanted list and suspected in the deadly 2003 bombing of a U.S. diplomatic convoy.

The rifle-toting gunmen, wearing black T-shirts, khaki vests and camouflage pants, took up positions on street corners and busy intersections last week.

Hamas officials said the force was needed to ensure quiet in the chaotic Gaza Strip. But the deployment set off more than a week of clashes with Fatah-dominated security forces in Gaza.

Reflecting Israeli concerns about the situation, officials confirmed Friday that Prime Minister Ehud Olmert and Defense Minister Amir Peretz agreed to permit Abbas to obtain new arms to beef up his presidential guard. Israel normally opposes any arms entering the Palestinian areas, fearing they will be used against Israel.

Amos Gilad, a top Defense Ministry official, said the arms would come from a third country, not Israel.

"I can't tell you the exact amount of weapons, but it is a limited amount intended for the purpose of securing Abbas' ability to protect himself on the backdrop of the important decisions he makes," he told Israel Radio.

Palestinian official Saeb Erekat said the Israeli claim was "baseless," though he conceded there are concerns for Abbas' safety in the current environment. He said Israel should not meddle in internal Palestinian affairs.

The Palestinian infighting has been compounded by a steadily worsening economic crisis in the West Bank and Gaza Strip — the result of crippling international sanctions against Hamas.

Western donors have cut off hundreds of millions of dollars of aid to the Palestinians, demanding that Hamas renounce its calls for Israel's destruction and recognize the Jewish state's right to exist. Hamas has rejected the calls.

Stepping up pressure on the Islamic group, Abbas on Thursday gave the militants 10 days to accept a proposal favoring Palestinian state alongside Israel. Otherwise, he said he would hold a national referendum on the plan in the next two months.

The plan was drawn up by senior Hamas and Fatah militants imprisoned by Israel. Approving the document would imply recognition of Israel, a key international demand. Hamas officials were divided over the proposal.

Hamas officials say the group is divided over whether to recognize Israel. A referendum could provide cover for the militants to become more moderate without appearing to succumb to Western pressure. Such a vote could also renew pressure on Israel to return to the negotiating table rather than impose borders on the Palestinians.

Israeli Prime Minister Ehud Olmert has said he is planning to unilaterally set Israel's border with the West Bank if he believes peace talks are impossible. During a trip to Washington this week, Olmert's unilateral plan was favorably received at the White House.

Abbas has urged Israel to return to the negotiating table. But Olmert says this is impossible as long as Hamas remains sworn to the destruction of his country.