The Palestinian Authority is set to regain civilian control of the Gaza Strip under a landmark deal agreed between Fatah and Hamas, but key security issues remain unresolved.

Senior officials arrived in the territory on Sunday to begin transferring responsibility for Gaza’s borders with Israel and Egypt under the agreement between the two Palestinian factions.

Israel reacted cautiously to the deal, with Prime Minister Benjamin Netanyahu telling his security cabinet they would not try to thwart it but would not recognise it either.

The agreement came as Tony Blair, UK Prime Minister at the time Hamas take control of Gaza a decade ago, revealed he thought he and other world leaders were wrong to boycott the group after it won Palestinian elections in 2006.

Under last week’s deal, all matters of civilian governance in Gaza are supposed to pass to the Palestinian Authority by the end of this month.

But Hamas has not relinquished its arsenal of arms and rockets – a public demand of Palestinian President Mahmoud Abbas – and will not hand over control of an extensive tunnel network it has built under Gaza.

According to multiple Arab and Israeli media reports, the agreement signed last week in Cairo included a secret clause where Hamas committed to halt its attacks on Israelis in the West Bank.

Egyptian and Palestinian sources confirmed the clause had been agreed under pressure from Egypt. Analysts noted the significance of the Cairo deal being signed by Hamas’s deputy political chief Saleh al-Arouri, who has been designated as the group’s “West Bank military commander” and until a few months ago directed his operations from a base in Turkey.

The issue of financial sanctions also remain unresolved. Hamas says the Palestinian Authority has not yet lifted financial sanctions on local government in Gaza, which were ordered by Mr Abbas five months ago. Fatah officials said they have agreed to end the sanctions but only after the PA is fully in control of Gaza again.

Israel’s response has been mixed. Mr Netanyahu publicly condemned the agreement last week, saying “Israel opposes any reconciliation in which the terrorist organisation Hamas does not disarm and end its war to destroy Israel.”

Senior cabinet members including Naftali Bennett and Zeev Elkin called for Israel to cut off all ties with the Palestinian Authority in response.

But Mr Netanyahu told his security cabinet on Monday that his government would neither attempt to prevent the deal’s implementation nor break of relations with the Palestinian Authority, Haaretz reported.

It is understood that Israel has silently allowed Egypt to proceed for now with agreement that it brokered between the Palestinian factions.

News of the deal came as Tony Blair told the journalist Donald Macintyre that he believed more could have been done when he was prime minister to negotiate with Hamas.

Mr Macintyre wrote in The Observer that Mr Blair said Hamas should have been “pulled into” a dialogue to attempt to shift their positions.

The former Prime Minister said: “But obviously it was very difficult, the Israelis were very opposed to it.

“But, you know, we could have probably worked out a way whereby we did – which in fact we ended up doing anyway, informally.”

Then-US president George W Bush led the push to halt aid and cut ties with the newly-elected authority in Gaza unless it agreed to recognise Israel and renounce violence.

Hamas rejected the terms, prompting the economic blockade that remains in place today.

Asked about Mr Blair's comments during Foreign Office questions in the Commons on Tuesday, Boris Johnson, the Foreign Secretary, suggested Hamas could one day be engaged in dialogue.

"There may be, in the end, the prospect of Hamas being brought in," he said.

But he added that the Palestinian group must "denounce terror, recognise Israel" and cease its antisemitic positions.