The 45-year-old firebrand called instead for Palestinians to support Fatah’s official candidate, PLO chief Mahmud Abbas, in the January 9 election to find a successor to late Palestinian leader Yasser Arafat.

“Members and supporters of Fatah (must) support the movement’s candidate, the combattant, brother Mahmud Abbas,” Barghuti said in a statement read by minister without portfolio Qaddura Fares who had visited him in his Israeli jail cell.

Speculation had been rife that Barghuti, serving five life sentences for murder, would formally announce his decision to stand from behind bars — posing a direct challenge to Abbas.

Fares said Barghuti, known to many Palestinians as the father of the intifada, decided to scrap plans to run despite numerous calls from Fatah members who wanted him as their candidate as the “symbol of freedom and independence.”

Fatah, the movement headed by Arafat until his death two weeks ago, said Friday it would hold its first internal elections in 16 years next August in what was seen as a gesture to Barghuti and his supporters.

The intense political bargaining that led to Barghuti’s statement came as the international community was engaged in new efforts to revive the peace process post-Arafat and ensure a smooth transition of power at the head of the Palestinian Authority.

A series of top Western leaders have swung through the region in recent days to pledge support for the Palestinian election and the internationally-drafted peace roadmap, including outgoing US Secretary of State Colin Powell and British Foreign Secretary Jack Straw.

Opinion polls show Barghuti, who was arrested in 2002, as the most popular Palestinian after Arafat, particularly among the young who want to see new blood in Fatah and regard Abbas as a member of the old guard.

A source in Barghuti’s entourage said that his potential candidacy had angered Abbas, a Fatah stalwart who stepped into Arafat’s shoes as PLO chief two week ago.

Barghuti’s initial intention to stand for the Palestinian Authority presidency was announced just a few hours before a meeting of the Fatah revolutionary council that endorsed the 69-year-old Abbas as its official candidate.

In his statement, Barghuti said he wanted to keep Fatah united, and called on Abbas to work towards Palestinian goals including the right of return of refugees and ensuring Jerusalem becomes the “eternal capital of Palestine.”

Fatah announced that its internal elections would be held on August 4, Arafat’s birthday, the first since a party conference in Tunisia in 1987.

It also called for parliamentary elections to be held on May 15, the day Palestinians mark as al-Naqba or the “catastrophe” of Israel’s creation in 1948.

The last presidential and legislative polls took place in January 1996.

Israel had insisted that Barghuti “would serve his sentence in full” even if he stood in the election.

“Israel is a constitutional state. We’re not talking of a political prisoner but of a man who was sentenced to life imprisonment… he will serve his sentence in full,” said an official from Israeli Prime Minister Ariel Sharon’s office.

Speculation over Barghuti’s possible candidacy had been rife since Arafat’s death, although observers acknowledged that he would have had a hard time overseeing Palestinian affairs from an Israeli cell.

Fatah’s so-called young guard, many of whom have been involved in the Palestinian uprising, have long sought an infusion of new blood in the party, including the organisation of long-due internal elections.