President Mahmud Abbas will dissolve the current government within the next 48 hours and charge Prime Minister Ismail Haniya of the Islamist movement Hamas with forming a new cabinet, officials said after the deal was announced.

“President Abbas will be issuing a presidential decree within the next 48 hours to dismiss the current government and charge a new prime minister” to form a new cabinet, Abbas spokesman Nabil Abu Rudeina said.

“Current Prime Minister Ismail Haniya will be charged ... with forming a national unity government,” a senior official said on condition of anonymity.

The 43-year-old Haniya will have five weeks to form a new government once he is officially charged with doing so.

Abbas told reporters in Gaza City that he and rival Haniya had clinched a deal on forming a national unity government after weeks of tortuous talks.

“We have finished defining the political program of a national unity government, based on the national reconciliation document,” Abbas said.

The document, agreed on by nearly all the Palestinian factions on June 27, implicitly recognizes Israel’s right to exist.

“In the coming days, we will start the process of forming this new government and we appeal to our people to support our efforts,” Abbas said.

Haniya said: “This agreement was anticipated because the will was real and honest in the greater interest of the Palestinian people and to strengthen national unity and to protect (Palestinian) rights and principles.”

Hamas spokesman Sami Abu Zuhri reiterated to AFP that Hamas’s signing up to the June initiative did not mean the Islamist movement was recognizing Israel.

Initial Israeli reaction to Monday’s Palestinian agreement was muted, with a spokeswoman for Prime Minister Ehud Olmert telling AFP only: “This is an internal Palestinian issue.”

Hamas and Abbas’s Fatah party now have to agree on the makeup of the incoming cabinet to complete the process, which could lead to the West ending a freeze on direct aid to the Palestinian Authority, which it adopted after the formation of the current Hamas-dominated government in March.

Following the announcement, Abbas called on striking civil servants — protesting non-payment of salaries that followed the Western aid freeze — to return to work.

“We call for a return to work and the end of the strike because all the sons of the Palestinian people should unite together in the national interest,” Abbas said.

The Palestinian territories have been gripped by a political and financial crisis since Hamas swept to power following January parliamentary elections.

After Hamas formed a government in late March, both the European Union and the United States froze direct assistance to the aid-dependent Palestinian government, demanding that the Islamist movement renounce violence, recognize Israel and agree to abide by past agreements.

The West, along with Israel, views Hamas as a terrorist organization. The group has killed scores of Israelis over the years in suicide attacks, but it has not claimed any such attack inside the Jewish state since January 2005.

The aid freeze has plunged the Palestinian territories into a severe economic crisis, with more than 160,000 civil servants not paid in full for the past six months.

The crisis has been compounded by Israel’s two-month military offensive in the Gaza Strip, launched after militants killed two soldiers and seized a third in a cross-border raid, that has sealed off the impoverished territory.

Hamas dealt Fatah a humiliating blow in the January election, winning 74 seats in the Palestinian legislative council and leaving the previously dominant Fatah with only 45 seats in the 132-member parliament.

British Prime Minister Tony Blair, who said during a weekend visit that the West should deal with a national unity government after boycotting the Hamas administration, cautiously welcomed Monday’s announcement.

“Of course, we have to see the details, but potentially, and I stress, potentially, this is a highly significant announcement, and we will want to see the details and how this unfolds over the coming days,” a spokesman for Blair said.

EU foreign policy chief Javier Solana said in Brussels that the deal could have “a very positive influence to re-energize the peace process.”

The United States said the future Palestinian unity government should comply with the demands of the diplomatic Quartet on the Middle East, which include recognition of Israel’s right to exist.

“For our part, what we are looking for in any Palestinian government is that it complies and conforms with the terms and conditions laid out by the Quartet back in January,” US State Department spokesman Tom Casey told AFP.