The UN secretary general has called on Palestinian leader Yasser Arafat to reform his security apparatus in the wake of recent violence in the occupied territories.
Mr Annan said the Palestinian leadership was in deep crisis. "They are facing a serious situation, a serious crisis, and they have to take steps and measures to bring it under control because without that, it is going to be very difficult to see any progress and the way forward," Mr Annan said.
The Gaza strip has been shaken by unprecedented disorder in the past few days including fighting between Palestinian security forces and militants demanding an end to corruption in Palestinian Authority institutions and its security apparatus.
Palestinian Prime Minister Ahmed Korei submitted his resignation to President Yasser Arafat over the growing lawlessness in Gaza, but Mr Arafat rejected it.
Mr Annan urged Mr Arafat to "take the time to listen to the prime minister" and carry out the reforms the international community has called for.
The UN, the United States, the European Union and Russia makes up the mediating "quartet" that has sought to bring peace to the Middle East.