During their meeting in Mecca on Tuesday, Palestinian Authority Chairman Mahmoud Abbas and the Damascus-based head of the Hamas political bureau, Khaled Meshal, are expected to agree on setting up a national unity government in the territories, a senior source said Sunday.

The source, Qadura Fares, a leading Fatah figure, who has recently been involved in mediation efforts between the estranged Abbas and Meshal, told Haaretz Sunday that there are no longer any disputes between the two main Palestinian groups.

"Barring any surprises tomorrow or the day after, this week they will agree on a government of national unity," Fares said.

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Meshal said Sunday that "we must not fail on Tuesday in Saudi Arabia. The dialogue with Fatah must succeed."

The meeting in Mecca was organized by Saudi Arabia in an effort to stem escalating internecine fighting between Fatah and Hamas in the Gaza Strip, which has claimed dozens of lives, mostly civilian, in the past two weeks.

According to details of the agreement reached between the two sides, the current prime minister, Ismail Haniyeh, will also be the head of the unity government.

Deputy prime minister and finance minister will be Salem Fayyad, who is considered to be an independent.

The foreign minister post in the unity government will probably be filled by Ziad Abu Amar.

The thorny problem of the person who will be interior minister will be resolved by Abbas choosing from a list of independent candidates put forth by Hamas.

Regarding the political platform of the unity government, Hamas will allow the PA chairman to hold negotiations with Israel with no strings attached.

Hamas went as far as to stress that the government's policy will be independent of the policies of the movement.

The government will in practice recognize the previous agreements with Israel - which was one of the three preconditions set by the Quartet in return for recognition of the Palestinian government - even though it will not include the statement "will abide by the accords" in its mandate.

It was also reported that over the weekend, Hamas sent a message through Ziad Abu Amar and Mohammed Rashid (former economic adviser of Yasser Arafat) requesting that the government's mandate include a statement describing "agreements that will serve the interest of the Palestinian people."

This latter request angered Abbas, who asked Meshal not to demand it during the talks that will be held in Mecca.

Meshal spoke on the telephone with one of the mediators during the weekend and promised: "I will not allow this sentence to cause a situation where there is no agreement. Rest assured that this will not be the reason for not agreeing on a unity government. We shall not leave Saudi Arabia without an agreement."

Meshal also sent a message to Abbas, through sources close to jailed Tanzim leader Marwan Barghouti, saying that as far as he was concerned, "an agreement exists. I am committed to forming a unity government."

The Hamas leader also said that there are a number of ways of transforming the sentence that upset Abbas, in a way that will be acceptable to all. One of the proposals is that in the document stipulating the appointment of the new government, it will be stated: "The government will respect all agreements that will serve the interests of the Palestinian people as they were defined in the decisions of the PLO's Palestinian National Council."

Correspondence between Meshal and Abbas continued Sunday.

Also Sunday, Salem Fayyad and Qadura Fares visited Marwan Barghouti in the Israeli prison where he is being held.

Meanwhile, in the Gaza Strip there was relative calm Sunday following three days of fighting in which 28 persons were killed and some 240 others injured. Nonetheless, during the morning hours there were sporadic exchanges of gunfire.

Mortars were fired Sunday at Abbas' offices in Gaza. There were no injuries and Hamas denied that its fighters were involved in targetting the PA chairman's offices.

In spite the cease-fire, few of the roadblocks set up by gunmen affiliated with Hamas or Fatah in recent days were lifted.

A joint Fatah-Hamas operations room was set up to deal with outbreaks of violence between members of the rival groups.

On Sunday, two members of the Presidential Guard died of wounds they suffered in fighting during the weekend. Also Sunday, it became clear that Hamas gunmen had abducted Ashraf Dahlan, 20, nephew of the Fatah strongman in the Gaza Strip, Mohammed Dahlan. He was arrested at a roadblock manned by the Hamas Executive Force on the road between Khan Yunis and Gaza.

The two groups began exchanging the hostages each had taken during the fighting, and it was agreed that the gunmen from both sides would leave the streets by midnight.