Mahmoud Abbas chooses Hamas

The warning comes only days after UN Secretary-General Ban Ki-moon said time was running out for any peace deal between Israelis and Palestinians.

In a sharp response to a deal signed this week in Qatar, Israel's Prime Minister Benjamin Netanyahu said Mr Abbas must choose between Hamas and Israel.

"Hamas is a terrorist organisation that aspires to destroy Israel and relies on Iranian support," he said. "I have said many times in the past that the Palestinian Authority must choose between an alliance with Hamas and peace with Israel."

Mr Ban, meanwhile, urged Mr Abbas to continue peace efforts with Israel despite the new agreement.

On Monday, Mr Abbas announced his Fatah organisation and Palestinian rival Hamas had reached an agreement for an interim joint government until elections at the end of this year.

At present, Fatah and the Palestinian Authority have certain powers in the West Bank, which is under Israeli military occupation. Hamas rules in the Gaza Strip after an election in 2006 in which it defeated Fatah and then violently expelled it from the strip.

The two Palestinian territories are not just separated geographically, but in their attitudes to neighbouring Israel.

The Palestinian Authority works with Israel in the West Bank, where Israel has authority over certain areas and matters and the PA has authority over others.

But Hamas refuses to renounce violence against Israel and continues a sporadic campaign of firing rockets from Gaza into southern Israel.

Washington reacted tentatively to the agreement.

State Department spokeswoman Victoria Nuland said the US would not interfere in internal Palestinian matters, but that it would not work with any Palestinian government that did not recognise the three principles of the Middle East Quartet: the renunciation of violence, the recognition of Israel and recognition of previous agreements between Israel and the Palestinian Authority.