Signed by Palestinian president Mahmud Abbas and Hamas chief Khaled Meshaal, the deal has been billed as as chance to end fighting in which 100 Palestinians have died in two months, win back Western aid and resume peace efforts.

But Palestinian analysts predicted that while Arab and some European countries could soften a crippling boycott imposed on the current Hamas-led government, they doubted the accord would satisfy Israeli and US conditions.

Prime minister Ismail Haniya, head of the previous Hamas-led government, is to keep his job, the finance ministry goes to internationally respected Salam Fayad, the foreign ministry to a moderate and the interior to an independent.

The accord itself, however, makes no explicit reference to Israel or respecting agreements signed by the Palestine Liberation Organisation.

Instead, Abbas calls on Haniya to "respect" agreements signed by the Palestine Liberation Organisation, which Hamas never formally joined, in a letter formally tasking his old nemesis with forming the new cabinet.

Commentators said respecting PLO agreements would amount to implicit recognition of Israel -- but Hamas rejected any question of recognition.

"The success of this government depends on the international community's policy towards it," said George Giacaman, director of the Palestinian Institute for the Study of Democracy.

"I think the Europeans are more or less ready to deal with it. In my opinion, the Americans and Israelis won't for the moment," he said.

But the Palestinian press unanimously hailed the agreement, hopeful that it would see the West end its debilitating boycott of the Hamas administration.

"Israel no longer has any pretext to boycott Hamas," trumpeted Al-Quds, the leading daily, saying the deal should fulfil Western conditions to ending the boycott and resuming peace efforts after a six-year impasse.