Palestinian President Mahmoud Abbas and Prime Minister Ismail Haniyeh achieved a breakthrough in talks late on Sunday that could see the formation of a new unity government within days, a Hamas spokesman said.

"The talks were very fruitful and positive," Sami Abu Zuhri, the official spokesman for Hamas, the Islamic militant group that leads the Palestinian government, told Reuters.

"Big progress has been achieved towards the formation of a government of national unity," he said after the two leaders held several hours of negotiations in Gaza City.

Abbas and Haniyeh have held a series of stilted talks in recent weeks over the formation of a new government that would see Fatah, the movement Abbas leads, join Hamas, the party of Haniyeh, in a reformed Palestinian administration.

It is hoped that such a move could lead to the lifting of international sanctions that have stymied the functioning of the government since Hamas came to power in March, after defeating Fatah in general elections held in January.

A senior Palestinian official, speaking on condition of anonymity, said the Hamas-led government could be reclassified as an "acting government" as soon as Monday, and would retain that title until a new unity government was formed.

"Progress has been made and may be followed shortly by practical arrangements towards the formation of a new government," Hamas's Abu Zuhri said, but would not elaborate.

Fatah officials were not immediately available to comment on the substance of the negotiations, but said discussions would continue on Monday.

British Prime Minister Tony Blair, who is in the region for talks, said earlier on Sunday the international community should deal with a unity Palestinian government if it breaks with the policies of the boycotted Hamas-led administration.

"I believe that such a government, based on the Quartet requirements, does offer the possibility of re-engagement by the international community," Blair said.

The Quartet of Middle East peace brokers - the United States, the European Union, the United Nations and Russia - have cut aid to Hamas's administration, demanding it recognize Israel, renounce violence and accept past interim peace deals.

"If such a (unity) government is formed, then I believe that it is right that the international community deal with such a government," Blair said at a news conference with Abbas.

Hamas, whose charter officially calls for Israel's destruction, has so far resisted international pressure and calls by Abbas to soften its policy towards the Jewish state.

But its administration has come in for increasing criticism in recent weeks, including strikes by doctors, teachers and other employees throughout the Palestinian territories who are angered by the non-payment of salaries for the past six months.

Hamas has been unable to pay most of the government's 170,000 employees any wages since it came to power because of the sanctions, imposed by the United States and the European Union, both of which consider Hamas a terrorist group.

(Chinadaily.com via agencies September 11, 2006)