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In Gaza City, celebratory gunfire was heard for more than an hour after the accord was announced. Residents expressed hope it would mean an end to the violence and the financial boycott, imposed by the West after Hamas came to power following January 2006 elections.

"We've been holding our breath. God willing, this is a permanent agreement, not a temporary truce. We hope this will lead to lifting the siege," said Mahmoud Qassam, a fish seller watching the ceremony at his home in Gaza City's Shaati refugee camp, yards from Haniyeh's home.

A first test of international acceptance of the deal could come on Feb. 19, when Israeli Prime Minister Ehud Olmert, Abbas and Secretary of State Condoleezza Rice are due to meet in Jerusalem for talks intended to revive peace negotiations.

If the West does not back the new government and refuses to lift the economic boycott, it could put a strain on the fragile peace between Hamas and Fatah.

The deal could also fall apart over the formation of the government - particularly over the issue of who will fill the vital post of interior minister, which would control the security forces. Under the agreement, the post will go to an independent, because Hamas and Fatah were each reluctant to see the other faction hold the ministry.

Hamas must propose the candidate for approval by Abbas, and it did not appear that the two sides have settled on a name.

Under the agreement, Hamas will get nine Cabinet posts, including the prime minister position. Fatah gets six, and other factions get four. Besides the interior ministry, independents will get the foreign ministry and planning ministry.

"There are many details that still need to be worked out after this agreement, including the interior minister and marketing the agreement to the international community," said Abdel-Rahman Zaydan, a member of the Hamas delegation. "The Saudis will be part of this effort."

Abbas had asked Saudi Foreign Minister Saud al-Faisal to sound out the Americans on whether "respect the accords" is acceptable, a Fatah delegate said, speaking on condition of anonymity because of the sensitivity of the diplomacy.

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