Palestinian Authority Chairman Mahmoud Abbas on Monday canceled a scheduled meeting with Palestinian Prime Minister Ismail Haniyeh during which the two were to discuss the formation of a unity government, a spokesman for Abbas said without giving details.

The cancellation came a day after Hamas' Minister for Refugee Affairs Ataf Adwan made remarks critical of Abbas.

The meeting will be held in the Gaza Strip at the end of the week instead, Israel Radio reported.

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Adwan criticized the chairman on Sunday for failing to pay the salaries of Palestinian Authority employees despite the ample funds available to him, claiming that Abbas declined doing so in order to put pressure on Hamas.

Abbas' office responded negatively to the accusations, calling Adwan ignorant and charging him with intervening in matters with which he is not familiar.

Sources in Gaza said Monday that the rift between the parties is not possible to bridge at the moment, adding that common ground must be found before setting a second meeting. Hamas refuses to recognize Israel, while Abbas demands it at least honor the Oslo Accords.

Saeb Erekat, the PLO chief negotiator, told Haaretz on Sunday that Abbas "will demand from Hamas or anyone who leads a unity government to recognize the Oslo Accords, the significance of which is recognition of Israel. That is the fundamental condition the PA chairman places on any future government."

Erekat added that Hamas will not be required to directly recognize Israel. "We have understood from the Quartet that for a new government to win international cooperation, the government's political platform should reflect that of the Quartet," he said, referring to the four major Middle East negotiators - the United States, European Union, United Nations, and Russia.

Palestinian sources said Abbas is not interested in a confrontation with Hamas, and is therefore not demanding that it directly recognize Israel, but rather recognize only the Oslo Accords themselves.

Haniyeh expressed hope Sunday that the two parties would "continue the discussions on the issue of forming a national unity government, and I believe we have progressed rather far. There is real hope that [the talks] succeed."

Haniyeh's comments come after both he and Abbas hinted in recent days that negotiations had reached an impasse.

Hamas: Unity government impasse could be resolved within two weeks
Hamas insisted on Monday that talks to form a Palestinian unity government were not at a "dead end" and said the impasse could be resolved with Palestinian Authority Chairman Mahmoud Abbas within two weeks.

Negotiations on forming a coalition which will include both Hamas and Fatah have foundered over whether the new government would recognize Israel.

Abbas said he wants a political platform honoring interim peace deals with Israel, which he hopes will satisfy the West.

Speaking at the General Assembly in New York on Thursday, Abbas said "any future Palestinian government" would honor all previous interim peace accords with Israel.

Hamas has sought vague wording that would not contradict the group's charter calling for Israel's destruction.

Abbas planned to travel to the Gaza Strip on Tuesday to meet Hamas leaders, an aide said.

Ghazi Hamad, spokesman for the current Hamas-led government, said there was a good chance of forming a unity cabinet.

"We have not reached a dead end," Hamad, speaking in Hebrew, said on Israel's Army Radio.

Hamad added that "Perhaps if we start ... discussing the details today - cabinet seats - then maybe we will resolve all the problems within a week or two."

Abbas has accused Haniyeh and other Hamas leaders of reneging on an agreement reached earlier this month on a political program for a unity government that included recognition of interim peace deals with Israel.

Palestinians hope that formation of a unity government will prompt Western powers to ease an aid embargo that has increased poverty and lawlessness in Gaza and the occupied West Bank.

The aid embargo was imposed when Hamas came to power in March to pressure the Islamic militant group to meet three conditions: recognize Israel, renounce violence and abide by interim peace deals.

A breakdown in unity talks could lead to a flare-up in fighting between rival armed factions loyal to Hamas and Abbas' Fatah movement. Hamas trounced Fatah in parliamentary elections in January.