The Palestinian party expected to help deliver a Middle East peace deal is in such disarray these days, it's afraid to compete in an election even with its main rival out of the picture.

Next month's municipal balloting in the West Bank should have handed an easy victory to the Western-backed Fatah movement since its bitter competitor, the Islamic-militant Hamas, decided to sit out the race. However, with strong signs that independents were poised to win in key towns, Palestinian president Mahmoud Abbas, Fatah's leader, called off the election at the last minute.

The latest sign of Fatah's decline raises new concerns about a growing political vacuum in the West Bank and sets the stage for a rocky transition once 76-year-old Abbas leaves office.

Abbas has groomed no successor and has already overstayed his term as president by 17 months because his standoff with Hamas – following the militants' violent takeover of Gaza in 2007 – has made it impossible to hold general elections.

Some fear Hamas could try to fill the West Bank void once Abbas is gone. Others see a successor in Abbas' prime minister, Salam Fayyad, an independent, though a poll this week indicated that Fayyad isn't seen as a serious presidential contender, despite his rising popularity.

Fayyad, a former World Bank economist, gets much of the credit for an economic upturn in the West Bank and improved law and order after a decade of violent rebellion, but these achievements don't seem to be scoring any electoral points for Fatah.

Fatah blames its disarray largely on Israel, saying it has been badly hurt by the prolonged stalemate in peace talks.

The party hitched its future to a deal with Israel in the 1990s and got to head a Palestinian Authority with a measure of self-government, but it has failed to deliver Palestinian statehood leaving the party without a programme.

Israelis and Palestinians have accused each other of sabotaging the negotiations – Israel with settlement expansion and the Palestinians with attacks by armed militants. Fatah gunmen were involved in such attacks several years ago, but have been reined in by Abbas.

"We are in crisis because we couldn't make peace and can't make war, we couldn't achieve our national rights by negotiations or by war," said Hatem Abdel Khader, a senior Fatah member.

The once dominant Fatah has been struggling since 2006, when it was trounced by Hamas in parliament elections. Since then, it has been unable to bounce back or shake its image of being corrupt, rudderless and divided.

Fatah's failure to promote younger activists to top positions also hurt the movement. Last year's party convention, the first in 16 years, was to have been a turning point, but produced no dramatic leadership changes.

Still, it looked sure to triumph in the 17 July elections in 300 towns and villages since Hamas announced it would not compete, fearing its candidates would be targeted in the crackdown Abbas' security forces have waged on the militants since they seized Gaza. However, last week, with the deadline for registering candidates just hours away, Fatah leaders were getting increasingly worried about problems in many districts. In Nablus, the second-largest city, former mayor Ghassan Shakaa defied local Fatah leaders and formed his own slate, arguing that he would do better as an independent.

In the largest city, Hebron, little-known Fatah candidates seemed poised for defeat by independents.

With these reports in hand, the party leaders called Abbas, who was in Washington at the time, and urged him to cancel the election. Abbas quickly agreed and a terse statement said the vote was being postponed to give reconciliation with Hamas another chance.

Fatah has been burned twice before by heading into elections despite warnings of impending defeat. Hamas scored heavily in 2005 municipal elections and a year later won the parliamentary poll.

For now, Fatah's only hope is to keep Abbas in power as long as possible, otherwise Fatah and the Palestinian Authority "will be in big trouble," said analyst Hani Masri. "Both might collapse."