Israel's prime minister approved Palestinian plans to bury Yasser Arafat (search) at his sandbagged headquarters in the West Bank city of Ramallah, government officials said.

Israel had been pushing for a burial in the Gaza Strip (search), and its acquiescence to the burial at Arafat's compound defused a potential conflict. The Palestinians see Arafat's Ramallah headquarters — his virtual prison for the last three years — as a symbol of his resistance.

Israeli Interior Minister Avraham Poraz said Israel would permit a "respectful" funeral and be careful not to "upset" Palestinian feelings.

He told Army Radio that the Palestinian Authority (search) would be in charge of security for the burial and Israeli forces would remain on the sidelines unless there was unrest, such as an attempted march on Jerusalem.

Israel will permit Israeli Arabs and West Bank Palestinians to attend, Poraz said, but only a small group VIPs from the Gaza Strip would be able to go.

"We have no desire to provoke the Palestinian street or the Arab world, or the rest of the world," Poraz said. "So when the man dies, we have to allow them to mourn him. In their eyes he's a hero."

Burial in the compound known as the muqata is considered less politically sensitive for Israel than Jerusalem, which had been the Palestinians' first choice.

Both sides claim Jerusalem as their capital, and Israel fears burying Arafat — leader of the Palestinian movement for four decades — in Jerusalem would have strengthened Palestinian claims to the city.

The Muqata is just a few miles (kilometers) from Jerusalem, and Palestinian officials said their leader could be reburied in the holy city in the future.

The U.S. administration had pressed Prime Minister Ariel Sharon's (search) government to permit the Ramallah burial, Israeli officials said on condition of anonymity.

Though U.S. Embassy spokesman Paul Patin acknowledged the Americans were involved in discussions on the burial controversy, he declined to confirm that pressure had been applied to permit a West Bank burial.

Egypt is making official arrangements to host funeral ceremonies, presidential spokesman Maged Abdel Fattah said on Wednesday.

Senior Egyptian security and intelligence officials met in the morning to discuss arrangements to hold the funeral at Cairo International Airport, security officials said. Arafat would be flown to Ramallah for burial after the ceremony.

Palestinian leaders returned to the West Bank early Wednesday, after rushing to Arafat's bedside in Paris for a firsthand look at his condition. For more than a week, Arafat's wife, Suha, had restricted access to her husband, causing a rift with his top lieutenants.

Meetings were taking place Wednesday for Arafat's Fatah movement and the PLO executive committee to discuss a possible funeral and Palestinian succession issues if Arafat dies, said Abbas Zaki, a member of Fatah's central committee.

Palestinian faction leaders in Gaza also met Wednesday and decided and agreed to hold a symbolic funeral at the same time as Arafat's Ramallah burial.

Palestinian Cabinet minister Saeb Erekat said he spoke to an official at Arafat's bedside early Wednesday and that he was still alive.

Another Palestinian official, who also spoke on condition of anonymity, said French doctors told the visiting Palestinian leaders that Arafat's brain hemorrhage on Monday night would likely prove fatal within 24 hours.

The 24 hours have passed and Arafat remains on life support, said the official, who was briefed by the Palestinian delegation to Paris.

Erekat said the officials at the Fatah and PLO meetings would decide whether to accept Egypt's proposal to hold a memorial service in Cairo before burying Arafat in his Ramallah headquarters.

Such a memorial service would allow foreign leaders to pay their respects without having to visit the West Bank, where the tattered Palestinian security forces might not be able to guarantee their safety.

On Tuesday, Palestinian Foreign Minister Nabil Shaath told a news conference in Paris that Arafat's condition had worsened, but that his organs still function. "He will live or die depending on his body's ability to resist and on the will of God," Shaath said.

The United States and Europe plan to refrain from sending heads of state to a funeral, opting instead to dispatch lower-level officials, diplomats told The Associated Press. European Union states are coordinating and are planning to send representatives at the ministerial level, the diplomats said.

In the night from Tuesday to Wednesday, Palestinians congregated in mosques and public places across the West Bank and Gaza for a holy night of worship, adding special prayers for their ailing leader.

The night of the 27th day of the Muslim fasting month of Ramadan is known as Laylat Al Qadr, or the Night of Power, and Muslims spend the night in worship and devotion, praying for the souls of the dead.

Hundreds of Palestinians took to the streets, holding teary, spontaneous candlelight vigils. In Gaza City's Square of the Unknown Soldier, young men and members of Arafat's Fatah party gathered, lighting candles and praying for their stricken leader.

Many of them cried.

"We hope that in this night, a miracle will touch president Arafat's body," said Mouman Abu Hashem, 21, standing by a large portrait of a smiling Arafat.

Others said that even if Arafat dies, his legacy would remain.

"Yasser Arafat equals Palestine," said 19-year-old Suleiman Abu Shoker.

Hundreds of posters of Arafat decorated the walls of his Ramallah headquarters. One read: "Yasser Arafat is the whole people and the people don't die."

In the markets and streets, shopkeepers kept televisions tuned to Arabic satellite stations and radios turned up so that the many people, shopping for the weekend festivities that mark the end of Ramadan, could get updates on Arafat's condition.