The political document, by Palestinian prisoners in Israeli jails, implicitly recognises Israel.

Rawhi Fattuh, a senior aide to Abbas, the president, said on Tuesday after the factions meeting in Gaza initialled the accord, that "all the obstacles were removed and an agreement was reached on all the points of the prisoners' document".

Fattuh said Haniya and Abbas would formally announce the deal later in the day.

A Hamas spokesman confirmed that an agreement was reached.

Peace chances slim

But with Israel preparing for a possible Israeli offensive in Gaza over the kidnapping of an Israeli soldier, there appeared to be a slight possibility that agreement over the document could soon lead to peace.

Peace initiatives must serve
Palestinian interests, says deal

Officials close to the negotiations said Abbas and Haniya agreed on a platform based on the manifesto, accepting a Palestinian state in the West Bank and Gaza Strip.

Such a two-state solution to the Israeli-Palestinian conflict would be in line with Fatah's recognition of Israel.

But officials said before Fattuh's announcement that the phrasing also noted that steps towards statehood, including Arab initiatives seeking peace with Israel and international resolutions on the conflict, must serve Palestinian interests.

That could allow Hamas to reject, on those grounds, any accommodation with, or recognition of, Israel.

Referendum off

The deal also appeared likely to cancel a July 26 referendum  that Abbas had scheduled over Hamas's objections on the prisoners' document.

Under the accord, Hamas would agree to form a unity administration with Fatah and other factions, officials said before Fattuh made his statement.

Hamas had said it would head any governing coalition, but it was not immediately clear if it won the point in the agreement.