The new Palestinian unity Government was rejected last night by Israel, but Hamas and Fatah leaders expressed confidence that their coalition would persuade Europe and other countries to end an international boycott.

The new Cabinet, which will be sworn in on Saturday, will contain nine ministers from the Islamist Hamas and six from President Abbas's moderate Fatah faction.

Washington reserved judgment. But European officials greeted it as a positive move, appearing to open a rift in the hitherto united international response to what will remain a Hamas-led Palestinian Government.

While all parties express caution until they see the Government’s programme, there are early indications that some members of the so-called international quartet of mediators may resume contacts cut off a year ago.

Israel immediately ruled out any dealings, saying that the new coalition failed to meet international demands that it recognise Israel, abide by previous agreements and renounce violence. Israel also insists that Gilad Schalit, the corporal kidnapped in Gaza last year, be freed.

“We will not recognise or deal with this Government or with members of this Government, and we expect the international community to stand firm in their demand to adopt the three principles,” a Foreign Ministry spokesman said. Hamas has refused steadfastly to recognise Israel, and a draft of the new Government’s platform falls well short of the demands.

However, President Abbas has argued that the deal was the best compromise he could extract from Hamas when the two sides met in Mecca last month during Saudi-sponsored peace talks. Ismail Haniya, the Hamas leader, who will remain Prime Minister, said he had received early signs that the European Union — the main financial donor to the Palestinians — may lift the economic boycott of his Government.

“We have had positive signs from them. If they are serious and looking for stability, this is the right moment to look ahead,” Mr Haniya said.

A British consulate spokeswoman in Jerusalem described the formation of the national unity Government as a “step in the right direction”, and said that Britain would “judge the Government on its actions and respond accordingly”. The new coalition could mean Britain and other European states holding contacts with non-Hamas ministers, including Salam Fayyad, the new Finance Minister, and Ziad Abu Amr, who replaces the hardline Hamas leader Mahmoud Zahar as Foreign Minister.

However, resumption of contacts would not mean an automatic restoration of aid, frozen after Hamas’s victory last year.

“We need to study the programme and the actions of the new Government very carefully and of course . . . to consult with our partners as well in order to take a decision on how and indeed whether it is possible to gradually reengage,” said Emma Udwin, spokeswoman for the EU External Affairs Commissioner, Benita Ferrero-Waldner.

Mark Regev, an Israeli Foreign Ministry spokesman, said that international divisions would weaken pressure on Hamas to moderate its militant stance. He pointed to “problematic” clauses in the Government’s draft programme, which describes Palestinian resistance as a “legitimate right”.

The programme also says that the new Government will “respect”, not abide by, agreements between the PLO and Israel. However, it also talks of “consolidating the calm and expanding it to become a comprehensive, reciprocal truce”.

“We know there are different attitudes but we believe that if people study the platform of this new Government it is not a move forward,” Mr Regev said.

But Azzam al-Ahmed, the Fatah candidate for Deputy Prime Minister, voiced confidence that if Europe supported the new coalition Israel and Washington would soon follow suit. “The fact that the EU has strongly hinted they will support us will force the others to reconsider,” he said.

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