UPDATE 4-Palestinians ban Al-Jazeera over plot allegations

* Arafat's mysterious death at centre of dispute

* Al Jazeera "astonished" by Palestinian Authority ban

* Abbas critic who aired allegations wants legal action

(Adds comment from Abbas critic)

By Mohammed Assadi

RAMALLAH, West Bank, July 15 (Reuters) - The Palestinian Authority on Wednesday banned Al-Jazeera television from operating in its territory and threatened legal action over allegations it broadcast against President Mahmoud Abbas.

The Information Ministry said the Qatar-based Arabic news channel had spread falsehoods and incited viewers against the authorities that run the Israeli-occupied West Bank.

The ministry said allegations carried on Al-Jazeera on Tuesday and attributed to a senior figure in Abbas's Fatah party, Farouq al-Qadoumi, were untrue.

The channel quoted Qadoumi as saying Abbas conspired with Israel to kill his predecessor Yasser Arafat in 2003. Arafat died in a Paris hospital in 2004 of an undisclosed ailment.

"Al-Jazeera television has been devoting significant segments of its broadcasts to incitement against the Palestine Liberation Organisation and the Palestinian National Authority," the ministry said in a statement.

"Despite our repeated calls (on Al-Jazeera) to remain objective when it covers Palestinian affairs and to voice a balanced position regarding the internal Palestinian situation, the channel is still inciting," it said.

In a report on the ban, an Al-Jazeera presenter said the channel "expressed its astonishment about this decision by the Palestinian Authority and said it will issue a statement to answer the accusations of the Palestinian Ministry of Information".

Al-Jazeera, the presenter said, was one of several news operations to report remarks by Qadoumi about an alleged scheme to kill Arafat. The broadcaster aired a half-hour special on the allegations.

CRITIC DEFIANT

In response to the ban, al-Jazeera again interviewed Qadoumi, who insisted the information was authentic and urged the prosecution of Abbas and other Palestinian officials -- a call that could stoke more internal Fatah disputes.