Arafat's supporters have been holding a vigil at his Paris hospital
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Yasser Arafat is in a reversible coma, at a "critical juncture between life and death", an aide says.
"I can assure that there is no brain death," Leila Shahid, Palestinian envoy to France, told French radio in Paris.
On Thursday, doctors at the military hospital where the Palestinian leader has been for a week denied rumours that Mr Arafat had died.
Mr Arafat, 75, has dominated Palestinian politics for 40 years, and there is no clear line of succession.
Supporters have been holding a vigil outside the Percy military hospital just outside the French capital.
In the West Bank and Gaza Strip, Palestinians were glued to radio and television broadcasts.
"Dear God protect our leader, Dear God protect our father," gunmen from Mr Arafat's Fatah faction shouted, firing in the air as they joined crowds in Gaza's streets.
In the West Bank city of Ramallah, Palestinian officials are said to be engaged in talks over a successor.
Cabinet Minister Saeb Erekat told the BBC there was no vacuum - and there would be no infighting between Palestinian factions in choosing who should follow Mr Arafat when he dies.
As the concern over Yasser Arafat's health continues to grow, Israeli authorities have tightened their security measures around the West Bank, barring men under 50 from entering Israel - even with a permit.
Large numbers of police reinforcements have also been dispatched to the al-Aqsa mosque compound in Jerusalem. Israel has made it clear it will not allow the Palestinian leader's body to be buried at the mosque.
'Between life and death'
Mr Arafat was transferred to Paris last Friday with an as yet undiagnosed illness.
Tests have shown that he has a low count of blood platelets, which are needed for clotting, but doctors are unsure what is causing the condition.
Ms Shahid denied "categorically" reports in French and Israeli media that Mr Arafat was being kept alive on life support.
"He is in a coma, we don't know the type but it's a reversible coma," she told RTL radio.
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HAVE YOUR SAY
Isn't there anyone amongst the Palestinian people who can lead but Arafat?
Majeed Hameed, Baghdad, Iraq
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"Today [Friday] we can say that Yasser Arafat in his state of health and at his age is at a critical juncture between life and death," the envoy said.
"The doctors don't have a diagnosis," she said. "All vital organs are functioning... he could or could not wake up."
Earlier, Israeli Justice Minister Yosef Lapid told Israel's Channel Two television that Mr Arafat was brain dead and being "artificially" kept alive.
"They [the Palestinians] will need to decide when to stop it," Mr Lapid said.
BBC Paris correspondent Caroline Wyatt says it seems almost certain that Mr Arafat's life is gradually drawing to an end.
He was taken into intensive care on Wednesday.
Some erroneous official pronouncements were made on Thursday amid reports, many in the Israeli media, that Mr Arafat had died.
Luxembourg Prime Minister Jean-Claude Juncker announced to reporters at the European Union summit that Mr Arafat had died, only to retract the statement after his advisers said there had been a misunderstanding.
In Washington, a reporter wrongly told President George W Bush that Mr Arafat had died. Mr Bush reacted by saying: "God bless his soul."
Preparations at home
Palestinian Prime Minister Ahmed Qurei has been assigned some of Mr Arafat's powers, making him the effective head of the Palestinian Authority.
There is no clear line of succession to Mr Arafat
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Mr Qurei is due on Friday to visit the Gaza Strip - where it is thought he will meet leaders of the militant group Hamas.
Mahmoud Abbas, the former Palestinian prime minister, is reported to have taken over the leadership of the Palestine Liberation Organisation and Fatah - the biggest faction in the PLO and Mr Arafat's political organisation.
Mr Arafat has not anointed a successor, although the parliamentary speaker would take over temporarily.
Israeli Prime Minister Ariel Sharon has said he will not allow his old adversary to be buried on the Temple Mount - also known as the Haram al-Sharif - in occupied East Jerusalem.
Israeli radio quotes the military as instructing troops to be prepared for disturbances and clashes with the Palestinian public which - in the event of Mr Arafat's death - may try to make its way to the al-Aqsa mosque.
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