The terrorist organisation Hamas is planning to join the Palestine Liberation Organisation.
The partnership, agreed on at a meeting in Cairo on Thursday, marks the next step in efforts to forge unity between long-time rivals Hamas and Fatah.
Under the terms of the deal Hamas leader Khaled Mashaal would work with Palestinian president Mahmoud Abbas to plan elections to the PLO’s parliament, although the vote is not expected to take place for several years.
Azzam al-Ahmed, a senior Fatah negotiator, said: "The reconciliation has taken off. It might take time, but we have started."
The PLO has been the key player for the Palestinians in peace discussion with Israel for decades, however Hamas does not recognise Israel and maintains its refusal to renounce violence. Israeli officials expressed concern about the agreement.
Israeli government spokesman Mark Regev said that nobody in the international community "should have illusions as to Hamas.
"This is a movement that is terrorist to the core. When [Abbas] walks toward Hamas, he's walking away from peace."