Syria's vice president told a senior Palestinian envoy Sunday that Damascus supports the formation of a Palestinian national unity government, Syria's official news agency reported.

During a meeting with Former Palestinian Prime Minister Ahmed Qureia, Farouk al-Sharaa said Syria supports "an agreement among Palestinian factions on the basis of national principles."

According to SANA, he said such unity would be "the sole guarantee for strengthening the steadfastness of the Palestinian people in the face of current challenges and achieving their legitimate aspirations for liberty and the establishment of an independent state."

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Syria hosts the exiled leadership of a number of Palestinian militant groups and could exert influence over Hamas, which currently heads the Palestinian government.

Hamas, which has been squeezed by the halt in aid from international donors, has agreed to share power with moderate Palestinian Authority Chairman Mahmoud Abbas' Fatah Party. While refusing to give up its calls for Israel's destruction, Hamas has said it will support the chairman's efforts to seek peace.

Abbas hopes such a government would restore international funding to the cash-starved Palestinian Authority. Foreign funding dried up after Hamas came to power, causing widespread hardship in the Gaza Strip and West Bank.

However, the United States has said it wants clearer statements from Hamas that it recognizes Israel, accepts existing peace deals and renounces violence. Palestinian officials said Hamas and Abbas postponed coalition talks
Sunday because of those U.S. demands, a move that underscored the difficulty Abbas was having in urging Hamas to soften its anti-Israel ideology.

Following his meeting with al-Sharaa, Qureia told reporters he had briefed the Syrian official on efforts to form a Palestinian national unity government. He did not elaborate.

PA officials: Coalition talks delayed due to U.S. demands
Palestinian Authority Chairman Abbas and Hamas group postponed coalition talks because of U.S. demands that a national unity government recognize Israel, Palestinian officials said Sunday.

The delay underscored the difficulty Abbas was having in trying to force Hamas to soften its anti-Israel ideology, a move that would pave the way for an end to the international sanctions that have crippled the Palestinian economy. Some Palestinian officials wondered whether the two sides would be able to bridge their differences.

Abbas will use a meeting this week with U.S. President George W. Bush on the sidelines of the UN General Assembly in New York to try to win support for the prospective coalition.

Foreign Minister Tzipi Livni said Israel would like to help strengthen the more moderate elements within the Palestinian Authority - Abbas - at the expense of the militant Hamas movement.

Livni called on the international community to unite to make Hamas take certain steps as a prelude to talks. She did not specify the steps, but did mention Israel's demand that Hamas release an Israel Defense Forces soldier captured in June.

"If the international community show determination in the next few weeks, maybe this is the moment in which Abu Mazen can be strengthened and Hamas will have to do something," she said, referring to Abbas.

Abbas and Hamas, which seeks Israel's destruction, accused each other on Sunday of trying to derail a planned unity
government that Palestinian officials hope will lift Western sanctions imposed after Hamas' election victory.

Abbas and Livni will both be in New York to attend the United Nations General Assembly in the coming week.

Haniyeh denies coalition talks frozen by Abbas
Palestinian Prime Minister Ismail Haniyeh of Hamas on Sunday denied that talks on forming a unity government had been frozen by Abbas.

Haniyeh said talks would only be put on hold while Abbas was attending meetings in the United States this week. Abbas aides had earlier said negotiations were frozen because Hamas had reneged on the terms of the deal to form the government.

"I assure all parties that there is no retreat. There is an agreement between myself and President Abbas to resume the dialogue when he comes back," Haniyeh told reporters.

He reiterated that his group would not recognize past peace deals, despite the international pressure.

"If we were to always bend to the will of America, we would absolutely never have a state, an existence or honor," Haniyeh told reporters, adding that talks with Abbas would continue when the chairman returned from New York.

American officials have informed Abbas' envoys that the U.S. would not lift the economic siege on the PA and would not work with the planned unity government so long as it failed to meet the three conditions set for the Hamas regime by the international community: recognizing Israel, recognizing agreements previously signed by the PA and the PLO and renouncing violence.

A spokesman for the current Hamas-led government, Ghazi Hamad, also expressed optimism earlier Sunday over the coalition talks.

"There are some issues of difference but in general things are going smoothly and well. We have not reached a dead end," Hamad said. "We need some more time to settle the differences."

Haniyeh has already declared that his government would not recognize Israel.

His political adviser, Ahmed Youssef, told Haaretz last Tuesday that the unity government would honor all signed agreements, but "only those that serve the Palestinian interest."

As for rejecting terrorism, Youssef said that "resistance" was considered a legitimate right so long as the occupation continues.

Abbas' spokesman, Nabil Abu Rudeineh, announced Saturday night that all preparations for a unity government will be suspended until Abbas returns from the U.S.

He did not give a reason, but Palestinian sources say that in view of the American objections to the unity government, Abbas put off his original plan to announce at the weekend the firing of the Hamas cabinet and appointment of Ismail Haniyeh as head of the unity government.

Meanwhile, Palestinian sources said Saturday that Abbas and Foreign Minister Tzipi Livni would meet in New York next week on the sidelines of the United Nations General Assembly.

Israeli Foreign Ministry spokesman Mark Regev had no comment on the report, which would be a precursor to expected talks between Abbas and Prime Minister Ehud Olmert.

Palestinian negotiator Saeb Erekat said delegations led by Abbas and Livni would meet next week, but he wouldn't say when or what would be on the agenda.

Saudi plan 'not enough'

The PA unity government's political platform was supposed to include the Saudi peace initiative, which ostensibly implies that if Israel withdraws to the 1967 lines, the Arab states would recognize Israel. However, U.S. officials have made it clear that this would not be enough, and that they will insist on explicit recognition of Israel.

The message was conveyed by senior State Department officials who met last week in Washington with Abbas' adviser, Akram Haniyeh, and Abbas' chief of staff, Rafik Husseini.

The U.S. consul general in Jerusalem, Jack Wallace, conveyed a similar message to Abbas in a meeting Saturday.

The Palestinian envoys have been in the U.S. capital since last Monday to prepare Sunday's meeting between Abbas and Secretary of State Condoleezza Rice. They are also preparing Abbas' meeting with President George W. Bush, which is scheduled to take place on Wednesday in New York, toward the end of the UN General Assembly.

Erekat said Abbas would discuss a wide range of issues with Bush, including the emerging coalition and the fate of kidnapped Israel Defense Forces soldier Gilad Shalit, who was seized by Hamas-allied militants in June.

The Palestinian newspaper Al Ayyam reported Saturday that Abbas would try to persuade Bush to accept the unity government's political guidelines.

Meanwhile, PA officials are holding consultations with countries in the Arab League ahead of the UN Security Council session Wednesday, at which the Arabs will seek to pass a resolution on resuming the peace process under the Saudi initiative.

According to Palestinian sources, the U.S. and Israel are willing for the Security Council to issue a statement supporting a resumption of peace talks, but will not accept a binding resolution to this effect.