Hamas says the government's monthly wage bill is nearly $118 million and it inherited debts of $1.3 billion it inherited.

March salaries for 140,000 government workers have not been paid, sparking protests and fears of growing unrest.

Hamas, which won January's parliamentary election and formed a government last month that included a scattering of independents, said it held discussions with 12 rival factions on Sunday and could decide to widen its current cabinet of 24 ministers.

Ghazi Hamad, a government spokesman, said: "There is a state of crisis and a state of siege. There is no place for any party to sit in the audience."

Fatah absent

However, the long-dominant Fatah movement of Mahmoud Abbas, the president, did not take part in Sunday's talks and has previously rejected joining Hamas in government.

Hamas tried after the election to gain the support of rival groups, including Fatah and other national and Islamist movements, but failed.

It was not clear how it would be more successful at winning the factions over this time around.

Since taking office on March 29, the Hamas-led Palestinian Authority has been under intense financial and diplomatic pressure from Israel, the United States and the European Union.

The West has cut off hundreds of millions of dollars of funding, calling on Hamas to recognise Israel, renounce violence and abide by existing interim peace deals.

During Sunday's talks with the factions, Ismail Haniya, the prime minister, reiterated his refusal to recognise Israel, which Hamas says was created on occupied Arab land.

In an apparent attempt to ease tensions with Hamas, Abbas has offered to hand control of the Gaza Strip's border with Egypt to the new government, officials said.

Last Tuesday, special forces loyal to Abbas assumed control of the crossing, angering Haniya.