Palestinian President Declares Deal To Dissolve Hamas-Led Government

TEL AVIV, Israel — Radical and moderate Palestinian leaders announced a deal yesterday to establish a unity government aimed at ending international isolation and reviving desperately needed aid.

The president of the Palestinian Authority, Mahmoud Abbas, said the present administration would be dissolved within 48 hours and that Prime Minister Haniyeh of Hamas would be asked to select a new cabinet.

Details of the deal have not been released, but leaks indicated that it was based on a manifesto embraced by Palestinian Arab prisoners in Israeli jails.

This calls for de facto recognition of Israel and the creation of a Palestinian state, although Hamas said it would not formally embrace Israel's right to exist,

Israel issued a measured reaction, calling on the international community to maintain its principal conditions for withdrawing financial sanctions imposed after Hamas won elections in January: the group's repudiation of Israel and sponsorship of violence.

The new government, which will include members of Mr. Abbas's Fatah faction, will have to agree to renounce violence, recognize Israel's right to exist, and release Corporal Gilad Shalit, a kidnapped Israeli.

The Foreign Office welcomed the pact, saying it provided a platform for re-opening official contacts with the Palestinian government.

A spokesman for Prime Minister Blair, who met Mr. Abbas during the weekend, was careful not to claim credit for a breakthrough. But he cited Mr. Blair as saying, "Potentially, this is a highly significant announcement."

Palestinian Arab government workers have not been paid for six months. Increasing hardship has led to street protests and rising criticism of the Hamas leadership.