The poll panel's announcement threatens to inflame a dispute between Islamic group Hamas, which has demanded the election be held on time, and the ruling Fatah party, which has expressed concern over Hamas's recent strong showing in local elections.

In its announcement on Monday, the election commission said it would need at least two months from the time a new election law was ratified to prepare for the vote.

The law was held up by a dispute between Palestinian leader Mahmoud Abbas and parliament over how many legislators should be chosen in district elections and how many from party slates.

"The Palestinian election commission understands that the Palestinian factions are looking for a law that is suitable for all, but the commission would like to say that it needs two months, after the ratifying the law, to prepare for the elections, and a new presidential decree to cancel the former one," the commission said in a statement.

Old law

The commission said it could carry out the election on time, but only based on the old law.

Hamas leaders have rejected the
court ruling through mass rallies

It called on Abbas to issue a presidential decree with a new election date as soon as possible.

Hamas, which has posted strong showings in three rounds of municipal elections since December, has insisted the parliament vote be held as scheduled.

Before the announcement, Hamas spokesman Muhammad Ghazal accused Fatah of using logistics as a pretext to delay the vote.

Abbas has said he supports holding the election on 17 July, but he is nevertheless
holding up final approval of the new election law.

Talks failure

In the latest development, Palestinian interior minister Nassr Yousef and Israeli Defence Minister Shaul Mofaz have failed to reach an agreement on Israel's pullout from the Gaza Strip, according to a Palestinian official.

"The meeting (in Tel Aviv) was negative, it did not bring any results," the official said on Monday, speaking on condition of anonymity.

Hamas wants the parliamentary
vote to be held as scheduled

"The Israeli side tried to push the Palestinians to fight among themselves," he added.

The two ministers will meet again next week, he said.

He regretted that Israeli officials had "again failed to stand by their commitments".

The Palestinian leadership was striving to bolster the truce, holding talks with Israeli officials and Egyptian mediators who helped persuade resistance fighters to halt their attacks.

Israel's plans to transfer security responsibility for towns in the West Bank, which have been frozen since the beginning of the month, were also set to feature prominently in the talks, said a spokesman for Yousef.

Landmark summit

The handovers were part of a series of confidence-building measures agreed at a landmark summit in February when Sharon and Palestinian leader Mahmoud Abbas both declared an end to more than four years of violence.

Agreement was also reached at the summit for Israel to free 900 Palestinian prisoners, but an initial batch of 500 releases has yet to be followed up.

Hamas proved its popularity in
recently held civic elections

Resistance groups such as Hamas, which was behind the bulk of last week's mortar attacks, have pointed to the prisoner issue to argue that Israel is not meeting its obligations.

A delegation from Egypt, which hosted talks in March when the factions formally announced the "cool-down", held talks with Abbas's dominant Fatah party in Gaza City in advance of talks with Islamist groups Hamas and Islamic Jihad on Tuesday.

"Our Egyptian brothers highlighted the importance of maintaining calm in the region as we near the Israeli withdrawal from Gaza," Fatah official Abd Allah al-Franji said.

Commitment stressed

Hamas's top leader, Khaled Meshaal, stressed the faction remained committed to the truce as long as Israel halted all aggression and released prisoners.

"We will retaliate against any violations if the aggressions continue and we have the right to defend and protect our Palestinian people," the Damascus-based chief was quoted as saying in Al-Quds newspaper.

"We will retaliate against any violations if the aggressions continue and we have the right to defend and protect our Palestinian people"

Khaled Meshaal,
Damascus-based Hamas leader

Hamas, which launched a barrage of rockets and mortar shells at Israeli settlements in Gaza last week, has said it may walk away from the ceasefire unless Fatah withdraws a legal challenge to results in three Gaza communities where the Islamic group won elections earlier this month.

That dispute began after a special court, formed to settle election disputes, ordered a partial revote in three large communities - the towns of Rafah and Bait Lahiya and the Buraij refugee camp.

Hamas won a majority in all three local councils in 4 May elections, but Fatah alleged there were voting irregularities.

Charges rejected

A Hamas spokesman in Gaza, Sami Abu Zuhri, said the group would stick to its demand that the original results be approved.

He suggested that if the group is rebuffed, it would reassess its commitments to the Egyptian-negotiated truce deal.

A top Fatah official, Abd Allah al-Franji, rejected Hamas allegations that the election courts are beholden to Fatah.

He said election courts in the West Bank have ruled against Fatah in 21 separate cases.

Al-Franji said the Egyptian delegation came to Gaza because of concern that instability in Gaza could easily spill over into Egypt.