Officials from the Palestinian Authority have accused the Israeli spy agency Mossad of setting up a fake al-Qaeda terrorist cell in Gaza.

Palestinian leader Yasser Arafat said that Israel had set up the mock cell in order to justify attacks in Palestinian areas.

Raanan Gissin, a spokesman for Israeli Prime Minister Ariel Sharon, called the allegation "sheer nonsense".

We are sure that Israel is behind this and that there are absolutely no groups such as al-Qaeda operating here

Colonel Rashid Abu-Shbak

On Thursday Mr Sharon said that members of Osama Bin Laden's al-Qaeda terror network were at work in the Gaza Strip, aiming to attack Israel.

Israel has named al-Qaeda as the prime suspect in a suicide bombing at a hotel in Mombasa, Kenya that killed 16 people last week and an unsuccessful missile attack on a nearby Israeli passenger jet.

"It is a big, big, big lie to cover (Sharon's) attacks and his crimes against our people everywhere," Mr Arafat said at his headquarters in the West Bank city of Ramallah.

Communications traced

Colonel Rashid Abu-Shbak, the Palestinian head of preventative security, said eight Palestinians had been approached from outside Gaza, and had been asked by Israeli agents to work for al-Qaeda with offers of money and weapons.

Colonel Abu-Shbak said the first approaches were made in March this year, and that all communications had been traced back to Israeli intelligence.

Al-Qaeda has been blamed for the attacks in Kenya

He cited the case of one Palestinian militant who had been approached and had been supplied with guns, and who was killed on his way to collect a second consignment of weapons.

"We are sure that Israel is behind this and that there are absolutely no groups such as al-Qaeda operating here," Colonel Abu-Shbak said.

"We can't say there will never be al-Qaeda here, but at least not for now," he added.

Mr Gissin said that the Palestinian accusations were propaganda and disinformation put out by officials trying "to exonerate themselves from the allegations they are collaborating and participating with terrorists".

US accusations

On Friday American media reported that al-Qaeda has set up a branch to help Palestinian militant groups fight Israel, according to a website US officials believe is linked to the organisation.

The new group has called for an end to inter-Palestinian feuding and has vowed to launch suicide attacks against Israeli and American targets in the Middle East, it said in a statement on the website, mojahedoon.net.

The Washington Post newspaper said United States officials believe the website speaks for al-Qaeda, and that it is being monitored by US intelligence agencies.

The Arabic-language website said al-Qaeda took responsibility for the attacks in Kenya.

The website carried a statement purportedly from the new al-Qaeda branch - the Islamic al-Qaeda in Palestine - pledging allegiance to Osama Bin Laden.

The group said it rejected any peace talks between Israel and the Palestinian Authority, declaring it would accept "nothing but the full liberation of the Palestinian land".