Mahmoud Abbas, the Palestinian president, and Ismail Haniya, the Palestinian prime minister, have reportedly reached a breakthrough in negotiations that could see the formation of a new unity government within days.

Sami Abu Zuhri, the official spokesman for Hamas, said after the two leaders held several hours of negotiations in Gaza City on Sunday: "The talks were very fruitful and positive.”

"Big progress has been achieved towards the formation of a government of national unity."

Abbas and Haniya have held a series of talks in recent weeks over the formation of a new government that would see Fatah, the movement Abbas leads, join Hamas, Haniya's party, in a reformed Palestinian administration.

It is hoped that such a step could lead to the lifting of international sanctions that have crippled the functioning of the government since Hamas came to power in March, after defeating Fatah in general elections held in January.

A senior Palestinian official told Reuters news agency that the Hamas-led government could be reclassified as an "acting government" as soon as on Monday, and would retain that title until a new unity government was formed.

Abu Zuhri said: "Progress has been made and may be followed shortly by practical arrangements towards the formation of a new government."

He would not elaborate on the substance of the negotiations, but said that talks would continue on Monday. Fatah officials were not immediately available to comment.

Strikes

Hamas, whose charter officially calls for Israel's destruction, has so far resisted international pressure and calls by Abbas to soften its policy towards Israel.

But its administration has come in for criticism in recent weeks, including strikes by doctors, teachers and other employees throughout the Palestinian territories who are angered by the non-payment of salaries for the past six months.

Hamas has been unable to pay most of the government's 170,000 employees any wages since it came to power because of sanctions imposed by the US and EU, both of which consider Hamas to be a terrorist group.

PHOTO CAPTION

In this hand out made available by the Palestinian Press Office, Palestinian president Mahmud Abbas (R) talks with prime minister Ismail Haniya in the West Bank town of Ramallah, August 15. (AFP)