The meeting between Palestinian President Mahmoud Abbas and Khaled Meshaal, Islamic Resistance Movement (Hamas)' exiled politburo chief in Syria, was failed on forming a national unity government after a three-hour meeting in Damascus on Sunday.

But the two sides expressed the willingness to continue dialogue between Abbas' Fatah and the ruling Hamas.

Describing his talks with Meshaal as "fruitful", Abbas said at a joint press conference that the talks on forming a unity government will continue.

"We discussed the national unity government. We hope the dialogue will continue," Abbas told reporters.

For his part, Meshaal said that disagreements still remain between the two sides and internal dialogue will continue in Gaza and the West Bank.

"There are still points of disagreement, but we will try to resolve them through national dialogue until we form a national unity government," Meshaal said.

According to a joint communique, discussions on the question of a Palestinian government of national unity has "made progress" and the talks will resume in two weeks.

The communique defined the meeting as brotherly and positive which was considered a big step forward toward the unity government and could reassure the Palestinians in different areas.

It said the two sides have agreed to prohibit inter-Palestinian fighting and stop provocative media campaigns against each other, adding that steps should be taken within a month to restructure the Palestinian Liberation Organization and activate it.

In the communique, both leaders rejected a Palestinian state "with temporary borders" as proposed by Israeli Foreign Minister Tzipi Livni.

It also appreciated the efforts made by the Syrian leaders.

With an aim to resolve bitter differences and form a Palestinian unity government after two days of back and forth negotiations, the meeting was firstly scheduled on Saturday and then postponed to Sunday before it was called off at the very last minute.

Rifts over sharing key ministries of interior, finance and foreign affairs and on how to deal with Western demands by the proposed unity government have hindered the talks.

The meeting finally took place after Syrian Vice-President Farouk al-Shara met with Abbas and Meshaal separately earlier Sunday.

It was hoped that the Abbas-Meshaal meeting, the first since July 2005, would make headway in forming a unity government and end months of deadly Palestinian infighting that has claimed dozens of lives.

Palestinian officials, however, refused to call the meeting a last chance effort.

Mohammad Nazzal, a member of Hamas politburo, said on Saturday that the Abbas-Meshaal meeting was the "first chance" gathering, not the last-chance meeting, which was supported by the Syrian government.

Another Palestinian named Mahir Tauhir said this meeting did not need a unilateral agreement, denying a last chance.

In Gaza, factions said a new round of inter-Palestinian talks would start on Tuesday to reach a deal putting off Abbas' intention to hold early elections.

Talks between Hamas and Fatah on forming the unity government broke down late last year due to differences over security force control and Hamas' refusal to recognize Israel. In December 2006, Abbas called for early elections, which led to violence in Gaza and the West Bank.

The Hamas government has been boycotted by the United States, the European Union and Israel ever since it was elected to power at the beginning of last year.

On Saturday, Abbas held a meeting with Syrian President Bashar el-Assad and leaders of Palestinian opposition groups based in Damascus.

(Xinhua News Agency January 22, 2007)