Hamas, which swept to a surprise victory in the 25 January parliamentary elections, has been asked to form a government which it expects to achieve later in March.
Fatah legislators, headed by Mahmoud Abbas, the Palestinian president, met on Saturday to decide on Hamas's invitation to join their government, and drew up a recommendation to the party's council "to decide not to take part in the government", officials said.
The officials said Fatah's 134-member revolutionary council would probably approve the recommendation as early as Sunday, possibly complicating Hamas's efforts to fulfil its goal of forming a broad-based cabinet.
Hamas, whose charter vows to destroy Israel, risks losing critical foreign aid to the Palestinian Authority from the United States and European Union, unless the group disarms and recognises Israel.
Officials from Hamas have said they will not compromise their principles for aid, and that alternative funding could come from Arab and Islamic countries.
Among three reasons cited by Fatah for opposing being part of such a government was Hamas's failure to recognise past peace agreements with Israel. The legislators also said that the once dominant party needed time to rebuild after the electoral defeat.
"I believe a Fatah partnership with us is in the interests of Fatah"
Hamas officials on a visit to Moscow said that while they preferred a partnership with Fatah, their 74 seats in the 132-member legislature, plus the guaranteed backing of four independent lawmakers, could suffice even without Fatah.
Ismail Haniya, Hamas's prime minister-designate, told Reuters he still hoped Fatah would decide to join him in a "step in the right direction to reinforce political partnership".
Khalid Mishaal, the Hamas leader, said: "I believe a Fatah partnership with us is in the interests of Fatah." Another Hamas official said Hamas would seek support from other, smaller factions if Fatah does not join.