"What I submitted yesterday was a resignation letter and not a request for a new post," he said.
Fayyad gave in his resignation to facilitate the formation of a unity government.
It is hoped that the government will be formed by the end of March.
"We consider that the positive climate seen in the first round of dialogue offers an opportunity that has to be exploited to put an end to divisions and as a basis on which to reach unity and reconciliation," Fayyad's office said.
Abbas, the Palestinian president, said he has asked Fayyad to continue in his post "until we see the results of the dialogue".
Talks in Cairo follow Israel's 22-day offensive on the Gaza Strip, that began on December 27.
The war left about 1,300 Palestinians and 13 Israelis dead.
On February 26, the Palestinian factions set up five committees to ensure the creation of a power-sharing government, the reconstruction of Gaza and to establish elections, amongst other issues.