Rival Palestinian leaders from the West Bank and Gaza Strip have decided to form a government of national unity within the "next five weeks", officials said early on Wednesday.
The agreement, between members of the Palestinian Liberation Organization and Hamas, was reached following talks in Gaza City which began on Tuesday evening, a member of the PLO who wished to remain anonymous told AFP.
"There has also been progress on the holding of future elections and the composition of the PLO," said the Palestinian official without giving further details.
Talks, which are taking place behind closed doors, are expected to continue throughout Wednesday.
It is not the first time that a national unity government has been announced by the rival factions, and on several previous occasions attempts to form an administration have collapsed.
Fatah, the PLO's main component, and Hamas signed a reconciliation accord in Cairo in 2011 aimed at ending the political divide between Gaza and the Palestinian Authority-ruled West Bank.
But deadlines have come and gone without any progress in implementing provisions of the accord.
Azzam al-Ahmad, a senior figure in president Mahmud Abbas' Fatah party, led the team which were greeted by Hamas prime minister Ismail Haniya and the movement's deputy leader Mussa Abu Marzuq.
Haniya had earlier called for cementing Palestinian reconciliation "in order to form one government, one political system and one national program".
Ahmad said: "I am happy that the time has come to end divisions."
The latest announcement of a deal comes as U.S.-brokered peace talks with Israel teeter on the edge of collapse.
The Palestinians met just a week before the end of a nine-month target originally set for an Israeli-Palestinian deal.
Hamas is totally opposed to the Palestinian negotiations with Israel.
Abbas threatens to disband PA
Meanwhile, President Mahmoud Abbas said Tuesday he will disband the Palestinian Authority, forcing Israel to take over governance if bilateral talks fail. He also named the terms for the extension of negotiations with Israel past an April 29 deadline.
Israel will be left to govern a population of over 2.5 million in the Palestinian territories, taking charge of security issues, healthcare and the economy of the area, if talks fail, Abbas threatened, RT reported.
The warning comes after reports over the weekend that Abbas was considering dissolving the Palestinian Authority if the April 29 passes without any developments.
"If the negotiations stop, it's the Israeli government that will bear the responsibility for the economic situation and the paying of the salaries of (Palestinian) employees, workers and farmers, for health and for education just as it did before the establishment of the Authority," he told reporters visiting his presidential headquarters in Ramallah.
“Also, it will bear responsibility for security, meaning Israel will bear full responsibility ... We hope that we won't come to this period but that we come to solutions,” he said.
Furthermore, Abbas set out conditions that Israel will have to fulfill for the continuation of negotiations. He called on Israel to establish a border between Israeli and Palestinian territory.
“If Israel believes in the two-state solution, let us define the borders – where Israel will be and where Palestine will be,” Abbas said.
He also reiterated Israel should stop the construction of new settlements in the West Bank and in East Jerusalem, and should release a fourth wave of prisoners.
U.S. State Department Spokeswoman Jen Psaki said the disbandment of the Palestinian Authority would have serious implications for Washington’s relations with Palestine.
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