RAMALLAH (Reuters) - Palestinian President Mahmoud Abbas has issued a decree to close an internationally funded Palestinian peace center run by a political rival, a government official said on Wednesday.

The Palestinian Peace Coalition (PPC) promotes along with Israeli activists the Geneva Initiative, an unofficial plan for Palestinian statehood and an end to conflict with Israel.

Its chairman is Yasser Abed Rabbo who was secretary general of the Palestine Liberation Organization until being unexpectedly dismissed from that post by Abbas last month.

The veteran PLO official, effectively Abass's number two in the organization, had been critical of the president's decision-making for some time.

A presidential decree issued on Tuesday ordered the PPC closed and its assets and property in Ramallah transferred to the Information Ministry, Deputy Information Minister Mahmoud Khalifa said.

Abed Rabbo was not immediately available for comment.

On Wednesday, the PPC office in Ramallah was still operating and its manager, Nidal Fuqahaa, told Reuters the group would challenge Abbas's move in court.

PPC officials said as it was a non-governmental organization, Abbas did not have the authority to close it. The PPC is largely funded by the European Union, Switzerland, the Netherlands, Sweden, Denmark and Finland, Fuqahaa said.

The PPC was established in 2003, with the backing of then-president Yasser Arafat, in a bid to promote peacemaking with Israel.

U.S.-brokered talks between Israel and the Palestinians on a permanent peace agreement collapsed in 2014, with both sides deeply divided over issues such as borders, the future of Jerusalem and Israeli settlement-building on land Israel has occupied since a 1967 war.

The Geneva Initiative advocates a two-state solution, Israeli annexation of large settlement blocs as part of land swaps between the two sides and recognition of Jewish neighborhoods in Jerusalem as the Israeli capital and of Arab neighborhoods as the Palestinian capital.

(Reporting by Ali Sawafta, Writing by Nidal Almughrabi; Editing by Jeffrey Heller and Robin Pomeroy)