Talks between Palestinian president Mahmud Abbas and Hamas on forming a national unity government have shown signs of progress after months of deadlock, with reports of agreement on a new premier.
"The dialogue has made progress, and my meetings with the president yielded results. We have laid the groundwork for forming a national unity government," prime minister Ismail Haniya said on Friday during a sermon in a Gaza mosque.
"We have reached agreement with the Palestinian groups, between Hamas and Fatah, in order to resume the talks next week. We hope to have good news within two or three weeks," added the head of the current Hamas-led government.
Abbas met Haniya four times in Gaza City this week, following a one-and-a-half-month interruption in face-to-face talks with the premier whose government has been boycotted by the West since it took power in March after an upset parliamentary election victory.
Despite Abbas's return to the West Bank, the president's chief spokesman was more upbeat than in recent weeks.
"The climate of discussions is very positive. Contacts and discussions are continuing and I think we are in the final stage of negotiations to reach an agreement on the formation of a unity government," Nabil Abu Rudeina said.
Abbas had attributed the earlier deadlock to Hamas's refusal to sign up to a government programme that met Western donor demands for the recognition of Israel and past peace deals.
The Palestinian territories have been in economic crisis since the European Union and the United States suspended direct aid in March.
But both sides now say the talks are on the right track and could even bear fruit quickly.
The Palestinian Authority president held a rare telephone conversation Thursday with the movement's supremo, the Damascus-based exile Khaled Meshaal.
But Haniya insisted on Friday that a unity government would not constitute a "concession" on the part of Hamas, which "would not abandon its people and the Palestinian cause."
Haniya said he was ready to step down as premier if necessary to end the Western aid boycott.
"The United States, the Europeans and others in the region have said that an agreement is a good thing but that they will not lift the siege without replacing prime minister Haniya.
"If we have to choose between the siege and myself, we must lift the siege and end the suffering," he said.
Mustapha Barghuti, an independent MP who has been brokering talks between Abbas and Haniya, said late Thursday that the two leaders had agreed on who should lead the promised national unity government.
They have "solved all problems regarding the name of the prime minister. This is no longer a problem," Barghuti told reporters in the West Bank.
"The announcement of a new cabinet could take place within two weeks but the prime minister may be announced in the coming days," he said.
However Hamas spokesman Fawzi Barhum said the two sides were not yet ready to announce a new premier-designate.
"Hamas suggested a candidate. We still cannot talk about an agreement or not. The name will be announced at the right time," he told AFP.
The European Union has been pressing for the national unity government to be formed as quickly as possible so that the aid boycott can be lifted.
Prime Minister Tony Blair said last week that Britain was "prepared to talk" to a unity government even if Hamas took part, provided it agreed to renounce violence, and recognise Israel and past peace deals.