Palestinian Prime Minister Salam Fayyad will resign Monday to open the door for reshuffling his West Bank-based government, sources said Sunday.

The sources told Xinhua that Fayyad would form and lead the new government. Months ago, Abbas declared that the government would be expanded and modified.

The news about the new government followed several decisions made by the Palestinian leadership to settle a state of internal split between the West Bank and the Gaza Strip, where rival Hamas movement holds sway.

On Saturday, Palestine Liberation Organization decided to hold presidential and parliamentary elections by September, though Hamas, which routed pro-Abbas forces in a brief fighting in Gaza in 2007, refuses the elections before reaching a comprehensive power-sharing pact with Abbas' Fatah party.

The leadership also decided to hold municipal polls in July.

Ghassan al-Khatib, spokesman of Fayyad's government, declined to comment on the news about the reshuffle.