-Israel, however, issued a statement on Thursday saying it would not deal with the new government.
 
'Swell of optimism'
 
The unity government was formed after months of political wrangling that often exploded into deadly street violence that left scores of Palestinians dead.
 
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Representatives of all the major Palestinian factions appeared alongside Haniya at a press conference in Gaza City after he had submitted his government to Abbas.
 
Hashem Ahelbarra, reporting for Al Jazeera from Gaza, said: "They wanted to send a message to the world that 'it's over - we have reached agreement.'"
 
Ahelbarra said Palestinians welcomed the end of a "dark chapter" in their history.
 
"There is a swell of optimism on the streets of Gaza ... but Palestinians will be monitoring the output of this government."
 
Changes ahead
 
Sameer Abu-Eisheh, the incoming Palestinian planning minister, told Al Jazeera that unity government will mean the implementation of a Palestinian national security council.
 
"There is agreement to restructure the whole security apparatus," he said.
 
The incoming interior minister, Hani al-Qawasmi, said his priority was to end factional fighting.
 
"We will co-operate with all parties, especially with the brothers in Hamas and Fatah and the rest of the factions to reach an honourable and satisfactory situation," he said.
 
Aid embargo
 
Senior cabinet members

Prime minister: Ismail Haniya, Hamas

Deputy prime minister: Azzam al-Ahmad, Fatah

Culture: Bassam El Salehi, Peoples party (Communist)

Foreign: Ziad Abu Amr, Independent

Finance: Salam Fayad, Independent

Health: Radwan al-Akhras, Fatah

Information: Mustafa Barghouti, Independent

Interior: Hani al-Qawasmi, Independent

Transportation: Saidi al-Krunz, Fatah

Planning: Sameer Abu Aicheh, Independent

Public works: Samih al Abed, Fatah

Prisoner Affairs: Suleiman Abu Sneina, Fatah, West Bank

Secretary of state: Khuloud Ehdeib, Independent

Social Affairs: Saleh Ziedan, Democratic Front for the Liberation of Palestine

Palestinians hope that the coalition government will enable the lifting of a crippling Western aid embargo in place since April last year.
 
Haniya said the European Union had a "positive position" towards his government but that the US administration and Israel have a "different attitude".
 
"We are going to do everything in our power to strengthen national unity, obtain a lifting of the siege imposed on the Palestinian people and improve our links with the international community."
 
A senior Abbas aide, Nabil Abu Rdeneh, said the new coalition opened the way for a resumption of Israeli-Palestinian peace talks.
 
"This is the right moment to move toward the peace process," he said.
 
However, David Chater, Al Jazeera's Jerusalem correspondent, said the consensus of opinion in Israel was that "Hamas still has its hold on the unity government while not giving up any of its radical policies".
 
Miri Eisin, an Israeli government spokeswoman, said:"The Israeli position remains the same.
 
"We will not recognise or deal with this government or with members of this government and we expect the international community to stand firm in their demand to adopt the three principles."
 
Western powers have called on the Palestinian government to renounce violence, recognise Israel and abide by previous peace agreements.