Mahmoud Abbas today issued a dramatic ultimatum to the Hamas-run Palestinian Government in an apparent attempt to force the Islamic militant group to moderate its political position.

The Palestinian President threatened to call a national referendum on the parameters of a future Palestinian state if no agreement on a political way forward for Hamas is reached within 10 days.

Hamas's refusal to moderate its views - it calls for the destruction of the state of Israel - has impelled the Palestinian state into crippling international isolation. Aid money has been cut off leaving civil servants unpaid, banking facilities stopped, and international borders are frequently shut, cutting off trade.

The ultimatum was issued as talks continue in an attempt to stop the spiralling violence between Hamas militias and the state security forces which are controlled by Mr Abbas's Fatah faction.

Mr Abbas said that if 10 days of dialogue between Hamas and his Fatah movement do not lead to a joint political platform, he would then call a referendum within 40 days.

The poll would ask Palestinians to either accept or reject a document drafted this month by senior Palestinian militants from both Hamas and Fatah, who are currently jailed in Israel.

The five-page compromise document calls for a Palestinian state in the West Bank, Gaza and East Jerusalem, the areas Israel captured in the 1967 Mideast War. It envisages co-existence with the state of Israel.

The blueprint proposes that activities be "confined to the territories occupied in 1967" - which could signal an end to attacks inside Israel - and suggests the creation of a national unity government.

Mr Abbas's decision to set a deadline represents a great political gamble, that could either could either help to resolve the Palestinians’ internal deadlock or lead them into a deeper crisis.

Hamas, however, is pledged to Israel’s destruction and has rejected international demands that it recognise the Jewish state or renounce violence - triggering economic and political sanctions.

The group has appeared to soften its position since taking power in March, but has refused to explicitly give up its demands for an Islamic state in all of historic Palestine.

"If you don’t reach an agreement within 10 days, I’m going to present the document to a referendum in 40 days. Within 40 days I will ask the people," Mr Abbas told a large gathering at his headquarters in Ramallah.

A survey by the Ramallah-based Near East Consulting group released today showed that 80 per cent of Palestinians support the prisoners’ agreement, against 20 per cent who are opposed.

Officials have described the talks as a last chance to stop the Gaza Strip falling into internecine strife and to forge a common approach to the growing political and economic pressures placed on the Palestinian Authority since Hamas came to power.

Mr Abbas's gamble received an early welcome from one senior Hamas figure. Abdel Aziz Duaik of Hamas, the Speaker of the Palestinian Parliament, said that the group accepted the idea of a referendum.

“Returning to the people is one of the most important principles in democracy,” said Mr Duaik. Such a vote could provide cover for Hamas and allow the group to moderate, without losing face.

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