The
Mr Abbas's call for presidential and parliamentary polls to be held at the "earliest opportunity" was also welcomed by
However the Islamic group Hamas, which won the latest Palestinian elections, rejected the move as a "coup attempt".
The call sparked fresh clashes between Hamas and Mr Abbas's Fatah movement.
In the latest violence, a man was killed when gunmen attacked a
Several gunmen were injured in exchanges of fires between the two rival groups across the Gaza Strip on Saturday.
Strife
Earlier, in a major policy speech in Ramallah, Mr Abbas said Palestinian people were suffering from an economic siege that had halved incomes.
He blamed Hamas for the crisis. The group's refusal to recognize
Mr Abbas was speaking after days of escalating tensions between Hamas and Fatah that have raised fears of civil war.
The
"While the elections are an internal matter, we hope this helps bring the violence to an end," White House spokeswoman Jeanie Mamo said.
Meanwhile,
"We hope that he will be able to assert his authority over all of the Palestinian people," government spokeswoman Miri Eisin said.
Legal maneuvers
Many Palestinians say the president has no right to dissolve the government, which was elected in January and is due to remain in office until 2010.
Correspondents say it is not clear when or how new elections would be held.
It will be up to the Central Election Commission to try to find a legal way of carrying out Mr Abbas's orders, says the BBC's Nick Thorpe in Ramallah.
The Hamas government reacted angrily to Mr Abbas's speech, calling it "a coup against Palestinian legitimacy and the will of the Palestinian people".
Ahmed Yousef, an adviser to Palestinian Prime Minister Ismail Haniya, said the call for elections was a recipe for violence.
"I think this will lead to bloodshed because this is something against the constitution."
Several Palestinian factions based in the Syrian capital,
The past week has been marked by attacks, counter-attacks and mutual accusations.
Hamas blamed Fatah for a shooting that targeted PM Ismail Haniya on Thursday, but Mr Abbas, in his speech, denied there had been any conspiracy to kill Mr Haniya.
Photo caption
Presidential bodyguards in