Sources in the ruling Fatah movement have reported that in recent days Abbas' security services have interrogated a number of party activists on suspicion that Dahlan had recruited them for an armed militia.
Meantime, The Jerusalem Post said that Ramallah, where Abbas' Palestinian Authority has its headquarters, is "awash with rumors about a 'conspiracy' by Dahlan and his associates to topple Abbas."
The newspaper reported that Dahlan, who was formerly the head of the PA's powerful Preventive Security Service in the Gaza Strip, "is believed to enjoy the backing of many members of the Fatah Central Committee and some senior officers in the PA security services."
The Palestinian daily Al Quds al Arabi recently reported that Dahlan has openly criticized Abbas in what some observers increasingly see as a grab for power.
Abbas became president following the death in November 2004 of Yasser Arafat, founder of Fatah and longtime chief of the Palestine Liberation Organization.
Abbas, a longtime party apparatchik who was always in Arafat's shadow, has sought to negotiate a peace agreement with Israel rather than wage war against it to liberate Palestinian land from 43 years of occupation. As such, he has been central to U.S. efforts to move the foundering peace process forward.
But, lacking Arafat's charisma and power base, he has been thwarted at every turn.
His popularity, such as it was, has ebbed, particularly among Arafat's Old Guard, as the prospect of a Palestinian state faded in the face of Israel's intransigence.
Abbas' failures at the negotiating table leaves him badly exposed politically, with ordinary Palestinians growing increasingly frustrated while Abbas' U.S.-trained security forces help Israel crush Palestinian militants.
With the U.S.-driven negotiation in crisis and Israeli Prime Minister Binyamin Netanyahu refusing to freeze settlement construction in the West Bank, Abbas' position is likely to worsen in the days ahead.
The charismatic and urbane Dahlan, long a critic of Abbas, was elected to Fatah's Central Committee, the party's executive body, in August 2009.
Abbas, 76, has retaliated by shutting down Dahlan's private television station and reportedly arresting 45 security officers known to be associated with him.
The PA is reported to have issued an arrest warrant for Dahlan's longtime friend, Col. Rashid Abu Shabak, who like Dahlan spent years in Israeli prisons in the 1970s and '80s.
Dahlan, who feuded with Arafat before he died, had his power base in the Gaza Strip with Abu Shabak as his No. 2. But he lost that when Fatah's fundamentalist rival, Hamas, seized control of the territory in June 2007 and booted out Fatah.
Dahlan, 49, who had sought to crush Hamas while he was the Gaza strongman, was forced to flee.
Many Fatah officials blame him for losing the territory to Hamas, effectively dividing the Palestinian movement.
But Dahlan, long closely associated with the CIA and Israel's internal security service known as Shin Bet, has been steadily building -- some say buying -- a power base in the West Bank, apparently with the intention of challenging Abbas.
Abbas' ire reportedly intensified a few weeks ago when The Wall Street Journal reported that Dahlan was part of a group that sought to replace Abbas with Nasser al-Qidwa, a nephew of Arafat.
Al-Qidwa, a fellow member of Fatah's Central Committee, is a Palestinian diplomat and was for a time the PA's permanent observer at the United Nations.
Haaretz reported that some of the suspects rounded up by Abbas' men admitted under interrogation they had received money from Dahlan, who built a business empire while he was security chief in Gaza.
There were reports that Dahlan's associates were buying weapons but there has been no conclusive proof of that. All the suspects were released but Abbas has sought to take Dahlan down a peg or two in the public eye.
He reduced the official bodyguard deployed at Dahlan's Ramallah mansion in an attempt to humiliate him. But, in a society where status is gauged by the size of one's bodyguard, Dahlan continues to ride around the West Bank in an armored motorcade with a large security detail.