“There will remain a state called Israel. This is a matter of fact,” he said.

“The problem is not that there is an entity called Israel,” Mr Meshaal said. “The problem is that the Palestinian state is non-existent.”

He went on to endorse the idea of a two-state solution with the Palestinian state made up of the West Bank, Gaza and East Jerusalem.

“As a Palestinian today I speak of a Palestinian and Arab demand for a state on 1967 borders. It is true that in reality there will be an entity or state called Israel on the rest of Palestinian land,” he said.

“This is a reality but I won’t deal with it in terms of recognising or admitting it,” the Hamas leader said.

The implicit acceptance of Israel and the tone of his remarks were in sharp contrast to previous comments, when he vowed that Hamas would never recognise Israel’s existence.

A year ago, he told al-Hayat al-Jadida, the Palestinian newspaper: “We will never recognise the legitimacy of the Zionist state that was established on our land.”

Last night Israel responded with deep scepticism to his latest comments.

“Unfortunately this is no indication that Hamas has changed its policy,” a spokesman for the Israeli Foreign Ministry said. “He [Mr Meshaal] is playing with words.”

Since Hamas won the Palestinian general elections last year and formed a government, it has been isolated by Israel and the West and been the subject of stringent sanctions.

Western powers insist that no dialogue with the group is possible until Hamas makes a formal recognition of Israel, renounces violence and respects past peace agreements.

Mr Meshaal did not meet those preconditions, but the timing of his remarks could, nevertheless, signal a change of direction by Hamas at a critical juncture in the Middle East.

President Bush was last night expected to announce a new diplomatic effort in the region as part of his new strategy on Iraq.

Condoleezza Rice, the US Secretary of State, is due to set off tomorrow on a week-long tour of the Middle East, starting with meetings in Jerusalem and Ramallah with Israeli and Palestinian officials. She will conclude her trip with a visit to London next week.

Experts on the region remain doubtful that any real progress can be made until Hamas resolves its increasingly violent power struggle with Fatah, the mainstream Palestinian political movement led by President Abbas.

Over the past month more than 30 Palestinians have been killed and 100 injured in factional fighting in Gaza that many fear could grow into all-out civil war.

Yesterday President Mubarak of Egypt and King Abdullah II of Jordan met in Cairo to press the two Palestinian groups to resolve their differences and form a national unity government.

Mr Meshaal said that Hamas favoured the idea, although he insisted that Ismail Haniyeh, the Hamas leader in Gaza, remain as Prime Minister.

“There are dialogues that are going on between us and Fatah and Abu Mazen [Mr Abbas] . . . True that in the past there were failures in dialogue but we as Palestinians have no option but dialogue,” he said. “There are chances for the success of the dialogue.”

Tony Blair has said that he will devote his last months in office to pressing for a breakthrough in the Middle East and he is expected to make a statement in the coming weeks.

However, senior British officials remained doubtful that any real progress was likely in the current climate with a weak Israel Government, deeply divided Palestinian leadership and continuing turmoil in Iraq, Lebanon and elsewhere.

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