Palestinian President Mahmoud Abbas has dismantled the tenuous coalition government of Fatah and Hamas, as the militant Islamic group's fighters seized control of the Gaza Strip.
Abbas declared a state of emergency on Thursday, fired Prime Minister Ismail Haniyeh of Hamas and called for a new government.
Fatah remains strong in the West Bank, while Hamas militants are celebrating their victory in Gaza, leaving Israel in the middle of two warring factions.
Ziad Asali, of the American Task Force on Palestine, said the dissolution of the unity government could open up aid in the West Bank, from countries who had protested the political influence of Hamas.
"There will be an end to the boycott by the international community of the Palestinian government, which will open up prospects in the West Bank for developing a new Palestinian economy and a political entity, while Gaza would stay under control of Hamas without financial resources," Asali told CTV Newsnet.
On Thursday, Hamas fighters captured two of four key Fatah security installations in Gaza City Thursday, with the Islamic militants hailing the victories as a "liberation" of the territory.
Fighters took over the Preventive Security headquarters in Gaza City, the intelligence service headquarters and overran the town of Rafah.
Witnesses said defeated Fatah fighters were being dragged from the security headquarters and shot in the head execution-style.
Witness Jihad Abu Ayad told The Associated Press that the men were being killed in front of their families.
"They are executing them one by one," he said. "They are carrying one of them on their shoulders, putting him on a sand dune, turning him around and shooting."
Fatah officials said seven of their fighters were shot dead, AP reports.
At least 20 Palestinians were killed in various battles as Hamas pushed for a complete takeover of Gaza.
Hamas and Fatah formed a national unity government three months ago in an attempt to end ongoing violence between the two sides.
Both factions have fought sporadically since Hamas won parliamentary elections last year, but Fatah has maintained control of Gaza's powerful security forces.
"We are telling our people that the past era has ended and will not return," Islam Shahawan, a spokesman for Hamas' militia, told Hamas radio. "The era of justice and Islamic rule have arrived."
Another Hamas spokesman, Sami Abu Zuhri called the movement "Gaza's second liberation," following Israel's 2005 evacuation of the coastal strip.
In a change of strategy earlier Thursday, Abbas ordered his elite presidential guard to fight back for the first time in five days.
"Fatah seemed to be folding like a deck of cards under Hamas' strength because they said there just wasn't a clear direction on what the higher echelons of the Fatah leadership wanted the Fatah forces to do," CTV's Middle East Bureau Chief Janis Mackey Frayer reported from Jerusalem.
"So there is a sense that being bolstered by an order from the top to fight back ... will see an intensification of the fighting in the Gaza Strip."
Abbas is in the West Bank town of Ramallah Thursday.
About 80 people, mostly militants, have been killed by fighting since Sunday. At least 20 people died Thursday.
With a report by CTV's Janis Mackey Frayer and files from The Associated Press
