Hamas spokesman Abd al-Aziz al-Rantissi told journalists on Sunday that the organisation had come to the conclusion it was "difficult to liberate all our land at this stage, so we accept a phased liberation".
"We accept a state in the West Bank, including Jerusalem, and the Gaza Strip. We propose a 10-year truce in return for [Israel's] withdrawal and the establishment of a state," he said from his hide-out in the Gaza Strip.
His comments appeared to strengthen signs of a big political shift by a faction sworn to destroy Israel and now seeming to move closer to the aims of Yasir Arafat's Palestinian Authority.
Waste of time
Tel Aviv dismisses any talk of Hamas moderation as a smokescreen for military preparations by a group at the forefront of attacks on Israel, particularly after the bombing that killed four Israeli soldiers at a border crossing on 14 January.
And al-Rantissi told journalists on Sunday the new proposal would not mean Hamas recognised Israel or spell the end of the Israeli-Palestinian conflict.
The resistance group has also rejected peace talks and demanded that a Palestinian state be formed on all the land that was Palestine under the British mandate preceding the creation of Israel more than five decades ago.
"We propose a 10-year truce in return for [Israel's] withdrawal and the establishment of a state"
Abd al-Aziz al-Rantissi,
The spiritual leader of Hamas, Shaikh Ahmad Yasin, recently said the resistance could accept a Palestinian state in the West Bank and Gaza Strip but had not previously given any indication how long a truce might last.
Hamas spokesman al-Rantissi added he did not expect Israel to respond favourably to the new suggestion, "when it has rejected the Palestinian Authority's offer for less land than what we are proposing".
And Israeli officials indeed say it would be impossible to return to pre-1967 borders, emphasising that Palestinians could not expect control over East Jerusalem and major settlements deemed vital for security.