Yasser Arafat, the Palestinian leader, is suffering from Parkinson’s disease, according to a report compiled by Israeli military intelligence. He is receiving treatment for symptoms of tremor and muscular rigidity but shows no sign of becoming incapacitated, it claims.

Palestinian officials have previously dismissed suggestions that Arafat’s health is declining, saying they are the result of a disinformation campaign by Israel to destabilise the Palestinian government. However, sources familiar with the report, drawn up by Amman, Israel’s military intelligence branch, describe it as “raw intelligence” from an extensive dossier on the medical and psychological profiles of prominent figures worldwide. The report emphasizes that “in spite of the symptoms, Arafat’s mental and psychological functions show no signs of deterioration”. It says it could be years before Parkinson’s, a progressive disease of the nervous system, renders him incapable of fulfilling his duties.

According to the report, Arafat, 68, is being treated with L-dopa, a drug used in Parkinson’s patients to counter weakness and tremor caused by deficiencies of a compound called dopamine that affects impulses between nerves and muscles. It also claims that Arafat is suffering from sclerosis – abnormal hardening – of the brain tissue.

The diagnosis will come as no surprise to those who have seen him at close quarters in recent months. In September he collapsed at an Arab League meeting in Cairo. He fainted at a session of the Palestinian legislative council last month and was taken to hospital. Those who have met Arafat in recent weeks say he sometimes has difficulty in speaking. His lower lip, hands and feet tremble involuntarily and his memory is said to lapse.

The intelligence report indicates that his handwriting has changed and his face has become frozen, a typical side effect of Parkinson’s. His gait and posture are said to have stiffened and his eyes are sometimes fixed on a point in the distance. The report concludes that he is in constant pain.

Arafat, however, has been written off many times before. In 1967 he narrowly escaped capture when Israeli troops occupied the West Bank and Gaza Strip in the six-day war. In 1982, Israel’s attacks on Lebanon forced him to flee by ferry with a ragged band of Palestine Liberation Organization (PLO) fighters to Tunis.

His luckiest escape came in 1992 when his plane was forced to make a crash-landing in the Libyan desert.

Aides to Arafat claim his obvious nervous disorders are the harmless result of a blood clot that developed after the accident. They say the frustration of dealing with an Israeli government he accuses of obstructing the Middle East peace process has also taken its toll on Arafat’s nerves.

Despite such pressures, he remains “as strong as an ox”, according to close advisers. While he no longer maintains a regime of 16-hour working days, Palestinian officials still wait all night outside his room for a brief meeting.

Their denials that Arafat is seriously ill have failed to half speculation among Middle Eastern analysts about who might succeed him. Mahmoud Abbas, the secretary-general of the PLO, appears a likely candidate.

However, most observers agree that Arafat’s death would undermine the Palestinian leadership. Without his authority, they say, overcoming Islamic militants and striking a peace deal with Israel would be much more difficult. Most dangerous of all could be a resurgence of support for Hamas, the Islamic fundamentalist group, which has mounted a series of suicide bomb attacks in Israel.

Some Israeli hawks welcome the prospect of instability that would follow the Palestinian leader’s death. They believe any deterioration in his condition could provide an opportunity to ditch the Oslo peace accord he signed with Yitzhak Rabin, the former Israeli premier who was assassinated two years ago by a right-wing extremist.

Benjamin Netanyahu, Israel’s prime minister, has made no significant concessions. Many believe the death of Arafat would signal the end of the Middle East peace process.