The formation of a Palestinian joint cabinet follows talks between Mahmoud Abbas, the Palestinian president and leader of Fatah, and the ruling Hamas government, led by Ismail Haniya, the Palestinian prime minister.
It is hoped the deal will end months of violence in Gaza in which scores of people have been killed and will also bring to a close a year-long international embargo against the Hamas government.
The talks in the Saudi city of Mecca, mediated by Saudi King Abdullah bin Abdulaziz, have led to agreement on the allocation of several posts in the cabinet.
A source told Al Jazeera that Khaled Meshaal, chief of Hamas' political bureau, would not become the deputy head of the Palestine Liberation Organisation (PLO).