I've decided to take rid of the "MySQL server has gone away" error in my scripts forever since i believed time before that the problem is occuring when the mysqli_multi_query function is called in PHP.
Today i have made a test to get sure of the exact problem. when i removed the mysqli_multi_query function and replaced every query in the function to a mysqli_query function the error disappeared completely.

Tested PHP Versions: 5.1.4, 5.1.5
Tested MySQL Versions: 4.1.19-standard, 4.1.21-standard, 5.0.22-community-nt-log

Thank you for this bug report. To properly diagnose the problem, we
need a short but complete example script to be able to reproduce
this bug ourselves. 

A proper reproducing script starts with <?php and ends with ?>,
is max. 10-20 lines long and does not require any external 
resources such as databases, etc. If the script requires a 
database to demonstrate the issue, please make sure it creates 
all necessary tables, stored procedures etc.

Please avoid embedding huge scripts into the report.

You can try the following script:

<?

## DB Host
$dbhost = "localhost";
# DB Username
$dbusername = "root";
# DB Password
$dbpasswd = "";

## Making the connection to the MySQL server
$link = new mysqli($dbhost, $dbusername, $dbpassword);
if (mysqli_connect_errno()){ print "An error occured while connecting to the MySQL server:<br>".mysqli_connect_error(); }

## Generating the error by using mysqli_multi_query
$link->multi_query("set character_set_server='cp1256';
set names cp1256;");

## Try to commit the following line, The "MySQL server has gone away" error will disappear
$link->query("SHOW PROCESSLIST");

## Obtaining the error message
if ($link->errno){ print "An error occured while using the database:<br>".$link->error;
}else{ print "The query excuted successfully."; }

## Closing the connection to the MySQL server
$db_link->close;

?>

Please Remove the previous example since the follwing example contains no mistakes in the code:

<?

## DB Host
$dbhost = "localhost";
## DB Username
$dbusername = "root";
## DB Password
$dbpasswd = "";

## Making the connection to the MySQL server
$db_link = new mysqli($dbhost, $dbusername, $dbpassword);
if (mysqli_connect_errno()){ print "An error occured while connecting to the MySQL server:<br>".mysqli_connect_error(); }

## Generating the error by using mysqli_multi_query
$db_link->multi_query("set character_set_server='cp1256';
set names cp1256;");

## Try to commit the following line, The "MySQL server has gone away" error will disappear
$db_link->query("SHOW PROCESSLIST");

## Obtaining the error message
if ($db_link->errno){ print "An error occured while using the database:<br>".$db_link->error;
}else{ print "The query excuted successfully."; }

## Closing the connection to the MySQL server
$db_link->close;

?>

Duplicate of bug #37732.