Palestinian Authority Chairman Mahmoud Abbas on Saturday threatened to dismiss the parliament and call early elections to end a political impasse with Hamas, but left the door open to reaching a compromise with the Islamic militant group, PLO officials said.

Abbas announced his decision at a meeting of the PLO's powerful executive committee, and plans to deliver a formal nationwide speech next week, participants said.

"At the end of the speech, he is going to announce that he will resort to early presidential and legislative elections but will keep the door open" for forming a unity government with Hamas, said committee member Khalida Jarar. Months of unity talks between Hamas and Abbas' Fatah movement broke down last week.

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Abbas told senior Palestinian officials "he has gone a long way to form a unity government but he failed" because Hamas objected to join a coalition that met world demands to renounce violence and recognize Israel, an aide to Abbas said.

Hamas officials immediately condemned the decision and claimed Abbas had no authority to call new elections.

Palestinian Prime Minister Ismail Haniyeh of Hamas said Saturday that Abbas' call for early elections "comes out of disrespect for the Palestinian people, and will have negative consequences."

Ahmed Yousef, a top aide to Haniyeh, said "the PLO right now is not qualified to decide on any Palestinian matter because the members of the PLO executive committee right now represent only themselves and their agenda."

"We will not allow any coup against this government," said Ismail Rudwan, a spokesman for the group.

Participants in Saturday's meeting said Abbas has not set a deadline for holding the new election. "We had an intense discussion on various options, and from what we heard, he is leaning toward going back to the people with a call for early presidential and legislative elections," said Palestinian negotiator Saeb Erekat.

Another official close to Abbas said the election would likely be held in four or five months. The official spoke on condition of anonymity because a formal decision hasn't been made.

On Friday, Abbas advisor Ahmed Abdel Rahman said that if Hamas wants to be part of a Palestinian unity government, it will need to abide by agreements the PLO has signed in the past, an act which would imply recognition of Israel.

Abdel Rahman's statement was made in response to remarks Haniyeh made Friday in Tehran, that his Hamas-led government would never recognize Israel and would continue to fight for the "liberation of Jerusalem."

"I can't criticize him [Haniyeh] when he is speaking in the name of Hamas. But if he is speaking as prime minister, he should abide by the national agenda," Abdel Rahman said.

David Baker, an official in Prime Minister Ehud Olmert's office, said Friday that Haniyeh's comments were "precisely the type of extremist rhetoric that fuels terror and has prevents any chance of progress between Israel and the Palestinians."

Hamas' exiled political leader, Khaled Meshal, said Friday that Hamas had made "a lot of concessions" to forming a new government, but that every time it met with Fatah "we discovered new things [conditions] aimed at placating the U.S."

In a speech at the Yarmouk Palestinian refugee camp near Damascus, Meshal said that the release of an Israeli soldier captured by Hamas this summer would only come through a swap of Palestinians held by Israel, adding, "You should know that either you respond to our demands or we are going to an open conflict and victory will be ours."

The head of Hamas' political bureau said that all of the Palestinian factions have reached a consensus on the establishment of a Palestinian state based on the borders before the 1967 Six Day War, adding that there would be no further compromises.

Meshal said that all the Palestinians are now agreed on the establishment of a state "taking into consideration the right of return, Jerusalem and the release of all detainees."

"But the far goal is the liberation of Palestine and that's our strategic choice," he added. "Our acceptance of this is not a result of weakness and failure. Israel and the United States would be deluding themselves if they think that the Palestinian people are not capable of doing other than this."

"It is in the interest of the U.S. and Israel to accept talking to us on this solution because the coming generations might not accept this solution," Meshal said, adding "if they want to stop bloodshed in the region, they should subjugate to the Palestinian will."

"We are ready now more than any other time in the past. The Zionists should know that nothing would stop us. The time of compromises has already gone."

In the Gaza Strip, tens of thousands of Hamas supporters rallied on Friday, demanding that Haniyeh head any Palestinian unity government, despite a deal for him to step aside as a means of restoring Western aid.

The public show of support for Haniyeh puts pressure on the ruling militant movement to retain him as its candidate to lead a any future cabinet.

That would further complicate talks over forming a unity government talks that Abbas, of the rival Fatah faction, has said are at a dead end.

"We want you [Haniyeh] to be the prime minister. We will not abandon your leadership of the cabinet," Ismail Rudwan, a Hamas spokesman, told the rally held in front of the Legislative Council in Gaza City.

"We demand the leadership of Hamas retain... Ismail Haniyeh as head of the government and head any incoming government."

Earlier Friday, Haniyeh addressed Iranian students at the Tehran University.

"The arrogant of the world and the Zionists... want us to recognize the usurpation of the Palestinian lands and stop jihad and resistance and accept the agreements reached with the Zionist enemies in the past," he said.

"I'm insisting from this podium that these issues won't materialize. We will never recognize the usurper Zionist government and will continue our jihad-like movement until the liberation of Jerusalem," he said.

Haniyeh arrived in Tehran on Thursday for talks with Iranian leaders, including hardline President Mahmoud Ahmadinejad, state-run media reported. This is Haniyeh's first tour abroad since Hamas took power in March.

Haniyeh praised the Iranians during his visit for the aid they have given the Palestinians.

"They [Israelis] assume the Palestinian nation is alone. This is an illusion... We have a strategic depth in the Islamic Republic of Iran. This country [Iran] provides our powerful, dynamic and stable depth," he said.

Iran has provided the Hamas-led Palestinian government with $120 million this year despite a U.S.-led international financial boycott of the Palestinian government. The financial aid has boosted Iran's influence among Palestinians.

The Palestinian prime minister will also meet with Supreme Leader Ayatollah Ali Khamenei and former president Hashemi Rafsanjani, the official Islamic Republic News Agency reported.

"Muslims and independence-seeking nations support the Palestinians because they have adopted the correct position towards the occupiers," Iranian First Vice President Parviz Davoudi told Haniyeh at the start of his four-day visit to Iran.

"Iran is ready to offer its valuable achievements and experiences in different fields to the Palestinian nation," the official IRNA news agency quoted Davoudi as saying.

Iran's support for the Palestinians has grown more vocal since Ahmadinejad came to power in August 2005. The former Revolutionary Guardsman has called the Israeli state a "tumor" which must be "wiped off the map".

Haniyeh, whose tour was also to include Syria, said Palestinian resistance against Israel would continue. "The popular Palestinian government not only has not recognized the occupiers but also considers resistance the natural right of the Palestinian nation."