Almost a year after his first cabinet ushered in unprecedented depression and political crisis, Haniya will be tasked on Thursday by Palestinian president Mahmud Abbas with forming the first Fatah-Hamas government.

"The prime minister's resignation and appointment by decree to head the new government should happen during a meeting, probably Thursday, between Ismail Haniya and president Abbas," said Haniya's chief of staff, Mohammed al-Madhun.

Before meeting Haniya, long considered Abbas's nemesis, the president is to give a televised speech at midday (1000 GMT) on Thursday, his office said.

A power-sharing accord, signed in Saudi Arabia on February 8, has been billed as chance to end fierce factional fighting in which 100 people have been killed since December, win back Western aid and resume peace efforts.

But it remains to be seen whether Israel and the West will lift the debilitating political and economic boycott, or whether the new government will prove able to prevent further inter-Palestinian bloodshed.

Haniya's radical Islamist faction Hamas, which won an election in January 2006 and is branded a terrorist outfit by Israel and the West, will have nine cabinet posts, Abbas's moderate Fatah party six and other factions four.

The key finance ministry will go to the internationally respected Salam Fayad, the foreign ministry to a moderate and interior to an independent.

As soon as he resigns, the 44-year-old Haniya will have five weeks to put together the new cabinet and get it passed through the Hamas-dominated parliament. In the interim, his current government will handle business.

In a televised address late Monday, Haniya urged the four sponsors of the stalled Middle East peace process to end their boycott of the Palestinian cabinet, charging that the Saudi agreement justified an end to sanctions.

But the European Union, Russia, the United Nations and United States, have made a resumption of aid payments conditional on the government recognising Israel's right to exist, renouncing violence and respecting past peace accords.

The Saudi agreement makes no explicit reference to Israel or to respecting interim peace deals signed by the Palestine Liberation Organisation, which Haniya's Hamas never joined.

Instead, Abbas urged Haniya in a letter annointing him as the incoming prime minister to "respect" the peace deals signed by the PLO.

"Those who are not part of the government can say whatever they like but those who are part of the government must respect the commissioning letter," Abbas has said. But the international community has so far reserved judgement.

With Moscow increasingly critical of Western policy and having described the boycott as "counterproductive", Russian President Vladimir Putin was to meet Abbas in Jordan later Tuesday.

Yet Haniya has far to go to overcome the recent Palestinian fighting, deep-seated political differences with Fatah, and convince Israel and Washington that Hamas has turned the corner.

EU foreign ministers said on Monday that the 27-nation bloc will only resume ties with the government if it accepts the Quartet principles.

The United States has kept mum, saying it needs more time to study the agreement to determine if it meets Western conditions for restoring aid.

In telephone calls with the key players, UN chief Ban Ki-moon has restated Quartet "support for a Palestinian government committed to non-violence, recognition of Israel, and acceptance of previous agreements and obligations."

Similarly, Israeli Prime Minister Ehud Olmert was quoted as saying on Monday that the unity government would anyway collapse and that the Palestinian agreement lacked "essential elements".