Fatah and Hamas reported the first breakthrough of their extended peace talks in Mecca today when delegates from both sides confirmed that they had broadly agreed the make-up of a coalition government.

The two main Palestinian factions, whose recent fighting has claimed more than 90 lives and raised fears of a civil war, said they had drafted a plan that would give Fatah five seats on the Cabinet, retain eight for Hamas and give three, including the important post of Interior Minister, to independent MPs.

The formation of a government of national unity is a priority for the talks. After negotiating until three o'clock this morning, a committee of delegates from both movements met again today and announced a "preliminary agreement on the distribution of the ministries" that will be presented for approval by President Mahmoud Abbas, the Fatah-leader, and Khaled Meshaal, of Hamas, this evening.

Maher Moqdad, a spokesman for Fatah, said “a deal has been reached on the ministerial posts, and the matter is closed".

Ghazi Hamad, a spokesman for Hamas, said "there are no points that can hinder reaching an agreement. We have a clear decision not to let the Mecca dialogue fail. We have no option: either to succeed or to succeed.”

Reports from the talks said that the Hamas Prime Minister, Ismail Haniya, would keep his job, while a Fatah leader becomes his deputy. Two independents, Ziad Abu Amr, a former culture minister, and Salam Fayyad, a former finance minister, have been nominated for the posts of foreign minister and finance minister respectively, while the list of potential interior ministers has been whittled down to five.

If the shape of the new Cabinet secures final agreement, the next and more delicate subject of negotiation will be the Government's attitude towards Israel and former peace agreements.

The refusal of Hamas to recognise Israel, renounce violence and accept previous peace deals — the three demands made by the Middle East negotiating "Quartet" of the EU, the UN, the US and Russia — has led to an international aid embargo that has crippled Palestinian public services.

According to delegates at the talks, the differences between Hamas and the more moderate Fatah have been haggled down to a single word: where Fatah is willing to "commit" to previous accords, Hamas will only "respect" them. Saudi officials have reportedly been asked to sound out American diplomats to see which phrasing they prefer.

A spokesman for Fatah said today that international perception — and the resumption of aid — was the only thing that matters.

“We don’t have a problem in accepting the wording ’respect’ the agreements,” said Nabil Amr. “We have informed the Saudis and our brothers in Hamas that we are ready to sign any phrasing accepted by the world for the sake of lifting the siege.”

But Hamas, regarded as a terrorist group by the EU and the US for its avowed intent to destroy Israel, has so far shown few signs of such flexibility. Mr Hamad, the movement's spokesman, said that the faction was not willing to seek the lifting of the boycott at "any price" set by the rest of the world. "The international community cannot force the Palestinian people to follow all its conditions," he said.

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