Palestinian president Mahmud Abbas arrived in Gaza City on Monday for crunch talks with the head of the Hamas-led government amid reports that their rival factions have reached a deal on a unity cabinet.
Abbas has tried but failed for months to persuade the ruling party to accept a moderate political platform acceptable to the international community in order to lift a crushing economic and political boycott.
The embattled president, who is the only Palestinian partner for a West that has cold-shouldered Hamas since it took office last March, was to meet prime minister Ismail Haniya and other factions' leaders, officials said.
"It is planned for me to meet president Abu Mazen in Gaza this evening to discuss the question (of forming a unity cabinet) and the general aggression against Beit Hanun," Haniya told his weekly cabinet meeting.
Israel has been waging a six-day operation in the northern Gaza Strip in which 55 Palestinians have been killed and more than 200 wounded. Both Abbas and Haniya have condemned the operation as a "massacre".
Sources in the Palestinian presidency said the incoming cabinet would be led by communications and technology minister Jamal al-Khodari, an independent seen as close to but not a member of Hamas.
Nevertheless it was impossible to garner on Monday whether Hamas had agreed to soften its stance on key demands that have blocked agreement for months -- namely to recognise Israel, renounce violence and abide by past peace deals.
Khodari refused to comment other than confirming "an agreement within Hamas on the name of the prime minister who will lead the national unity government".
Hamas has always insisted that the incoming premier and make-up of any unity cabinet take into account the results of last January's general election which the movement won by a landslide, thrashing Abbas's moderate Fatah party.
The government should "respect the democratic choice and results of the last legislative elections", Haniya reiterated, declaring that the cabinet should work towards "lifting of the blockade and end the suffering of our people".
Hamas and Fatah have been in deadlock for months over forming a unity government acceptable to the West, which froze direct aid since Hamas took power, flinging the Palestinian territories into unparalleled economic crisis.
The West demands that any Palestinian government recognise Israel, renounce violence and abide by past peace agreements, which the Islamists have refused.
British Prime Minister Tony Blair said on Monday that London was "prepared to talk to a national unity government", even if Hamas was part of it, provided the cabinet accepted those international conditions.
"You can't negotiate a two-state solution, Israel and Palestine, if one part of the people you're negotiating with is saying 'We don't want Israel to exist,'" Blair told his monthly news conference.
Abbas's arrival in Gaza came one day after a Palestinian cabinet minister said Hamas had reached agreement with Fatah on a broad coalition cabinet acceptable to Western donors.
"We've reached an agreement on everything, on the forming of the government, the name of the future prime minister, the criteria for appointing new ministers and the programme," said minister for prisoner affairs Wasfi Kabha.
Palestinian lawmaker Mustafa Barghuti, who has been mediating between Abbas and Haniya in recent days, also claimed that both sides had agreed "to form a national unity government with independent and capable members".
But Hamas spokesman Fawzi Barhum denied any final agreement had been reached, saying only that "important progress" had been made.