RAMALLAH, West Bank -- The Palestinian parliament approved Yasser Arafat's new Cabinet on Tuesday, effectively ending a challenge to the Palestinian leader that began last month with demands he share power.

The 56-18 vote came as Israeli Prime Minister Ariel Sharon faced the most serious political crisis of his 20 months in power, with the moderate Labor party poised to quit his coalition. A senior legislator allied with Sharon said Tuesday he believed snap elections were inevitable.

Naming a new Cabinet was a key reform measure expected of the Palestinians in a new U.S.-backed peace plan. During a debate before the vote Tuesday, Arafat critics provoked Arafat's anger by saying that there are not enough new faces in the 19-member Cabinet, and that some of those suspected of corruption remain in their posts.

"I don't think this Cabinet can lead the Palestinians out of the crisis," said legislator Ziad Abu Amr. Arafat tried to silence him, shouting: "You are not allowed to talk about the members of the executive committee, you are not allowed."

However, after a solid majority of legislators voted in support of the Cabinet, Arafat said he was proud of what he called a display of Palestinian democracy.

The new Cabinet presented by Arafat includes only four new ministers. The most important appointment was that of a new interior minister, Hani al-Hassan, a senior member of Arafat's Fatah movement. The interior minister will oversee the Palestinian security services.

Last month, rebellious legislators from Arafat's Fatah movement forced Arafat's Cabinet to resign in what was seen as the most serious challenge in his eight years at the helm of the Palestinian Authority.

Palestinian lawmakers demanding reforms said they suffered a setback because of Israel's 10-day siege of Arafat's headquarters -- launched after a deadly Oct. 21 suicide bombing in Israel.

After the siege, which boosted Arafat's flagging popularity, his critics dropped a demand that he name a prime minister to share power. In meetings with rebellious legislators, Arafat portrayed a vote against his Cabinet as a show of support for Israel and the United States, which has also been demanding broad reforms.

Meanwhile, Israel's government faced its own internal problems. A growing dispute over Jewish settlements in the West Bank and Gaza Strip is threatening to bring down Sharon's coalition government and force early elections.

Sharon has said he will try to form a narrow coalition of hardline and Orthodox Jewish parties if his junior partner, the moderate Labor party, votes against the 2003 state budget Wednesday, as threatened, to protest what it views as excessive spending on the settlements.

But Sharon's coalition chairman, Zeev Boim, said Tuesday that "the more realistic scenario is that there will be no choice for the prime minister but ... to seek early elections within 90 days."