Longtime Palestinian rivals Fatah and the terrorist group Hamas are understood to have reached a deal to form an interim government following reconciliation meetings in Cairo.

Egyptian officials told state television that the agreement would include setting a date for a general election.

They said: "The consultations resulted in full understandings over all points of discussions, including setting up an interim agreement with specific tasks."

In February Palestinian Authority elections were set for July but Hamas said it would boycott them and prevent voting in the Gaza Strip. But a spokesman for Hamas said "all differences" between the two had been resolved.

Fatah, the party of Palestinian President Mahmoud Abbas, and Hamas have been feuding for more than four years, following the 2006 legislative elections when Hamas won the popular vote.

After the election the parties formed a unity government but the deal fell apart in June 2007 when Hamas seized power in the Gaza Strip.