Palestinian factions haggled over posts in a future national unity government on Monday as Israeli Prime Minister Ehud Olmert said he was ready, with conditions, to deal with the new cabinet.
Talks took place one day after the main parties said they had agreed on a US-educated academic to head up the cabinet which Palestinians hope will end a crippling Western aid freeze against the current Hamas-led administration.
Delegates from president Mahmud Abbas's Fatah party and Islamist movement Hamas huddled together at the Palestinian Authority headquarters in Gaza City in the presence of current prime minister Ismail Haniya, an official said.
The Fatah team was led by former prime minister Ahmed Qorei and the Hamas delegation by Jamal Abu Hashem, from the movement's leadership.
Speaking to reporters after the talks, Haniya underscored that the unity government would take "the elections and their results" into account -- referring to Hamas's upset January poll win over Fatah.
The Palestinians want a "government able to speak to the world and break the siege", Qorei said, referring to the suspension of direct EU and US aid since the Hamas-led government took power in March.
Abbas was expected in Gaza City on "Thursday or Friday" to continue personally the talks with Hamas, he added.
Sources close to the talks said negotiations were focussed on dividing up the four most important cabinet posts -- finance, foreign affairs, the interior and information ministries.
"The two parties will hold these important posts but need to find an agreement on sharing them out," the source said.
Palestinians desperately hope that a unity government will be able to end the Western aid freeze which has left civil servants unpaid for months.
The Hamas-led administration has repeatedly rejected calls from the so-called Middle East quartet -- the European Union, Russia, the United Nations and the United States -- to recognise Israel and past deals, and formally renounce violence.
In a rare interview with a Palestinian newspaper published on Monday, the Israeli prime minister said he was prepared to talk to a unity cabinet, including Hamas, provided the Islamists bowed to the quartet's demands.
"If Hamas accepts the quartet conditions, I will sit down with them," Olmert was quoted as telling Al-Quds daily.
He recalled that successive Israeli governments had boycotted Palestine Liberation Organisation leaders, including current president Mahmud Abbas, before later negotiating with them after the 1993 Oslo accords.
"Even Abu Mazen (Abbas) belongs to an organisation that we considered as terrorist in the past but he adopted new principles to which he remains faithful."
Fatah and Hamas sources said on Sunday that they agreed on Mohammed Shbeir, a clinical biologist and former president of the Islamic University who is considered close to Hamas but never joined the party, as the next premier.
Abbas was due to brief King Abdullah II in Jordan on Tuesday on the unity government efforts before heading to Cairo for similar talks with President Hosni Mubarak, said the Palestinian ambassador to Egypt, Atallah Khairy.
Within Fatah, Abbas was on Sunday officially appointed "president of the central committee" and the movement's "commander in chief" during a vote of the 132 members of the party's Revolutionary Council in the West Bank.
His election relegated the Tunis-based Faruq Qaddumi, who presented himself as Fatah leader after Yasser Arafat died two years ago, into second place.