The emir of of Qatar, Sheikh Hamad bin Khalifa Al Thani, has called for unity between Palestinian rivals Hamas and Fatah.
Sheikh Hamad also denounced Israel's policies and praised people of the Gaza Strip for standing up to it with "bare chests" during a one-day visit to the coastal enclave ruled by Hamas.
The visit was the first by a head of state since Gaza fell under an Israeli blockade after Hamas took control of the territory in 2007.
"First, the division between the Palestinians and, second, the division between the Arabs caused more damage
to the Palestinian case than the repeated Israeli aggression," Sheikh Hamad said in a speech at the Islamic University in Gaza on Tuesday.
"There [are] no peace negotiations, and there is no clear strategy of resistance and liberation. Why shouldn't brothers sit together and reconcile, and put the world before its responsibility: Either a just peace with Israel's consent, or force Israel to agree to peace."
Hamas welcomed the visit, with its government spokesman Taher al-Nunu, saying: "This visit has great political significance. He is the first Arab leader to break the political siege.".
The emir pledged a project that seeks to build 1,000 homes for poor families in the devastated Khan Younis area in the south of the Strip.
Laying the foundation stone of the project, Ismail Haniyeh, the Hamas prime minister, thanked the emir "for his brave decision to visit Gaza".
"The visit of the emir announces officially the breaching of the political and economical siege imposed on Gaza for more than five years," said Haniyeh.
"Today in Gaza and tomorrow in the freed Jerusalem," he added.
Haniyeh also announced that the level of Qatari funding had risen from the $254m previously reported to $400m. No details about the extra funds were immediately available.
Mouin Rabbani, a senior fellow at the Institute of Palestine Studies in Amman, said the emir's visit was part of a regional power struggle. Hamas had long been headquartered in Syria, but the group has pulled away from Damascus since the start of the uprising against president Bashar al-Assad.
"[Qatar] is engaged in a struggle for influence with Syria and Iran in regional terms," he said. "Hamas and Palestine more broadly have significant symbolic value in this context, and Qatar has in fact been instrumental in weaning Hamas away from Damascus."
Still no reconciliation
The 41km-long Gaza Strip, home to 1.6 million people, sustained major damage during a 22-day Israeli military operation in December 2008 and January 2009.
Khan Younis has been particularly hard hit during the international blockade of Gaza. A 2011 EWASH report revealed that 90-95 per cent of Gaza's water is unsafe to drink.
In a phone conversation on the eve of the visit, Mahmoud Abbas, leader of the Palestinian Authority in the West Bank, welcomed the emir's intentions to help the people of Gaza.
A late-night statement from the office of Egypt's President Mohammed Morsi said his country welcomed the emir's visit to Gaza, which it said came as part of Egypt's effort "to break the siege on the people" of the territory.
Al Jazeera's Nicole Johnston, reporting from Gaza, said Hamas leaders were making the most of the visit.
"I haven't seen Hamas officials looking quite so pleased with themselves since they managed to free more than 1,000 Palestinian political prisoners last year," she said.
Haniyeh also commented on the prisoner release, negotiated around the release of captured Israeli soldier Corporal Gilad Shalit.
Osama Hamdan, a senior member of Hamas, talks to Al Jazeera about the emir's visit
"The visit coincides with our celebrations of the first anniversary of the victory that the Palestinian resistance achieved, which is [the] Shalit swap - where Qatar played an important role in the success of the deal," he said.
Our correspondent reported that Hamas has been saying that it "really ends their political isolation".
"They've really been treated as 'a terrorist organisation', as a pariah government, since they took control in 2007, and now they finally have a world leader, a leader of an Arab country, visiting them," said Johnston.
Qatar has played a key role in the reconciliation process. Earlier this year, the emir brought together Abbas and Hamas' supreme leader in exile, Khaled Meshaal, to make a deal.
Under the arrangement, Abbas was to lead an interim unity government to pave the way for new elections in the Palestinian territories.
That deal is yet to be implemented.