Gaza (AsiaNew/Agencies) – A sudden breakthrough between Palestinian factions was announced yesterday.  Palestinian PM Ismail Haniya and his government have resigned as part of the process set to establish Palestinian unity government as required by the Makkah agreement.

Mr Haniyeh, who led a Hamas-controlled government since his party won the January 2006 parliamentary elections, has been asked by Palestinian President Mahmoud Abbas to form the new government.

Mr Abbas said he hoped the national unity government would "inaugurate a new Palestinian era in which people live in peace and security".

Now the PM designate has five weeks to form his cabinet.

President Abbas told the new executive to respect all Arab and international resolutions and agreements signed by the PLO as decided in the Makkah agreement.

Although Hamas has always rejected this, it constitutes an implicit recognition of Israel since the PLO has signed several agreements with the Jewish state.

Speaking on television, Mr Abbas also said that he wanted to see Israeli corporal Gilad Shalit freed. His capture on June 25 by Palestinian groups caused tensions and sparked clashes with Israel.

In Israel and the United States reactions are still based on a wait-and-see attitude. In the absence of official statements, Israeli newspapers have given large coverage to a statement by US Secretary of State Condoleezza Rice who, whilst reiterating her support for Palestinian President Abbas, expressed “strong reservations” about the national unity government saying the formation of the new cabinet complicates US peacemaking efforts.

Rice said she will reserve judgment until there is evidence the new government meets US demands like recognising Israel, renouncing violence and abiding by agreements made by the previous Palestinian government. She also did not confirm that US diplomats have warned Abbas that Washington would shun the new government.

For this reason, a number of Hamas lawmakers urged Abbas on Thursday to call off his meeting with Rice in protest against Washington's position toward the planned coalition government.

The formation of the new national unity government, which just yesterday seemed unlikely because of differences over appointments to some key posts, is part of the agreement signed by Fatah and Hamas in Makkah, where Abbas and Hamas’s political chief Khaled Mechal had been invited by Saudi King Abdullah.

The agreement came after months of tensions and deadly clashes and is designed to bring to an end a Western boycott against aid to the Palestinian National Authority after Hamas won power last year. Both the United States and the European Union consider this party a “terrorist organisation”.