Palestinian President Mahmud Abbas and Prime Minister Ismail Haniya agreed on a policy outline for the new government on Monday but conditions on its make-up risk delaying its formation and any subsequent lifting of aid cuts.

"Anybody who joins the government from whichever party has to be honest and capable and not suspected of corruption," said Haniya, head of the Hamas cabinet and alluding to past cabinets run by Abbas's Fatah and seen as corrupt.

"This government has suffered over the last six months from a clash of responsibilities," between the cabinet and Abbas's presidency, added the prime minister, who will be charged with putting together the new cabinet.

He said his Hamas-led administration had been "without security apparatus, media or money" since it took office last March, ushering in a period of unparalleled fiscal and political crisis in the Palestinian territories.

A political adviser to Haniya, Ahmed Yussef, said Hamas wanted twice the number of cabinet posts as Fatah in the new coalition government.

He told AFP that given that the Islamists won 74 seats to Fatah's 45 in January's parliamentary election, Hamas should have eight to 10 cabinet portfolios to their moderate rivals' four or five.

But Yussef did concede that key portfolios such as finance and foreign affairs, likely to have the most contact with the outside world, should go to independents "to avoid disagreements and polarisation".

Less than 24 hours earlier Abbas demanded in his West Bank powerbase that Hamas officials detained by Israel, and an Israeli soldier held in Gaza by militants, should be released before the new cabinet is announced.

He also said the announcement of a new government depended on a complete lack of violence in the Palestinian territories.

But in Gaza City, five intelligence officers were shot dead on Friday in broad daylight in the worst intra-Palestinian killings since a spate of bitter feuding broke out between Fatah and Hamas sympathisers earlier this year.

There was no immediate claim for the brazen drive-by shooting in the Hamas-controlled Shatti refugee camp near Haniya's home.

The five agents, a general in the Fatah-dominated intelligence branch and four of his subordinates, were killed instantly when unknown attackers raked their vehicle with gunfire, a security source said.