GAZA CITY, Gaza Strip (AP) – The Hamas-led government withdrew a controversial 3,000-member private militia from the streets of Gaza on Friday, saying it wanted to reduce friction with the rival Fatah movement.

The move came on the second day of Hamas’ talks with Fatah aimed at halting violence and resolving a deadlock that has paralyzed the Palestinian government and frozen relations with most of the world.

The talks focused 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 in July if Hamas, which is committed to Israel’s destruction, doesn’t accept the plan within 10 days.

Prime Minister Ismail Haniyeh of Hamas is expected to meet with Abbas next week to discuss the proposal, Hamas officials said. But in a speech Friday, Haniyeh hinted that he opposes a referendum.

“This (a referendum) is not a substitute for the political program of the government that was approved in parliament,” he said in a sermon at a Gaza mosque.

Haniyeh said Hamas will stick to its political program.

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 in 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 bases and help 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.

Haniyeh insisted that the militia will be folded into the police force.

“It will be a police force that will wear the uniform of the police,” he said.

Still, the decision signaled a concession by Hamas, which only days earlier said it had no intention of withdrawing the force. Fatah officials want the militia disbanded, but say individual members could become members of existing police units.

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

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

After forming the new security unit in defiance of Abbas, Hamas further enraged him by appointing as its head 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.

Reflecting Israeli concerns about the Palestinian security situation, officials confirmed Friday that Prime Minister Ehud Olmert and Defense Minister Amir Peretz agreed to permit Abbas to obtain new arms for 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 it was allowing in new arms for Abbas 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.

The possible referendum on the plan drawn up by senior Hamas and Fatah militants imprisoned by Israel could provide cover for Hamas to moderate without appearing to succumb to Western pressure. Such a vote also could renew pressure on Israel to return to the negotiating table rather than impose borders on the Palestinians.

Approving the document would imply recognition of Israel, a key international demand. Hamas officials were divided, saying their leaders are split over whether to recognize Israel.

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

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.