Palestinian President Mahmoud Abbas and his Fatah party have been at odds with Hamas since the 2006 elections (Photo via Creative Commons).

Creating unified Palestinian government is routinely considered an imperative element to the creation of an independent Palestinian state, despite well-documented reluctance by the West to deal Hamas due to its refusal to recognize Israel.

"We have agreed to form a government composed of independent figures that would start preparing for presidential and parliamentary elections," said Azzam al-Ahmad, Fatah's chief negotiator in Cairo. "Elections would be held in about eight months from now," he told Reuters.

The new deal - which was hashed out through a series of secret meeting in Egypt - took many top officials by surprise, including Israeli Prime Minister Benjamin Netanyahu.

"The Palestinian Authority must choose either peace with Israel or peace with Hamas. There is no possibility for peace with both," Netanyahu said in a televised statement.

Nonetheless, those in on the negotiations said the process was a success, indicative of the willingness of both parties to forge a lasting peace in the region.

"The consultations resulted in full understandings over all points of discussions, including setting up an interim agreement with specific tasks and to set a date for election," Egyptian intelligence said in a statement on Wednesday.

The two Palestinian factors have been in direct conflict with one another since Hamas won the Palestinian parliamentary election in 2006.

Following the election results, the Fatah leadership under President Mahmoud Abbas refused to relinquish power in the West Bank. In response, Hamas ousted pro-Fatah forces from the Gaza Strip in 2007.

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