Israel is holding talks with Egypt on a new cease-fire agreement in Gaza - the negotiations revolve around an Egyptian proposal within a broader effort to reconcile the two main Palestinian factions, Fatah and Hamas.

Another plank in the broader agreement being discussed is the reopening of the crossings to the Gaza Strip, on the border with Sinai and Israel.

On the Israeli side, the talks are being led by Defense Minister Ehud Barak, who is coordinating his moves with Prime Minister Benjamin Netanyahu.

Israel opposes Egypt's proposal of a Palestinian unity government because it allows Hamas to be part of the Palestinian leadership.

Meanwhile, on attempts to reach a deal on abducted soldier Gilad Shalit, senior Israeli political sources said during the weekend that there has been "no substantive progress."

The source said the Gaza cease-fire was raised in talks held in Cairo by Amos Gilad, the head of the political-security bureau at the Defense Ministry, and National Security Adviser Uzi Arad, with Egyptian intelligence chief Omar Suleiman. The issue was also discussed during Barak's visit to the Egyptian capital several days ago.

During his recent trip to Europe, Netanyahu was asked many times about talks for a new cease-fire arrangement, but did not confirm or deny any developments.

Sources at the Prime Minister's Bureau said Saturday they would not add to the statements by Netanyahu.

Following Sunday's report in Haaretz on the negotiations, MK Nahman Shai (Kadima) criticized Netanyahu for reneging on promises he made during his election campaign.

"Netanyahu is koshering Hamas, and in opposition to his promise on the eve of the election, he is engaged in bestowing legitimacy upon a terror organization that has set itself the goal of Israel's destruction," said Shai.

On a number of occasions before the Knesset elections in February, Netanyahu declared that his government's policy would be to seek the demise of Hamas rule in the Gaza Strip. This policy is part of coalition agreements that include the parties Shas and Yisrael Beiteinu.

Israel's motivation for resuming talks with Egypt on a new cease-fire agreement is the feeling among many defense officials that despite the relative calm in Gaza, fighting might resume in the near future.

"This calm is fragile, so it is necessary to examine whether it is possible to reach an agreement," a senior political source in Jerusalem told Haaretz.

The Israelis say the ability to carry out another offensive like Operation Cast Lead last winter is minimal because of the stiff opposition of the international community, especially the Obama administration.

However, in Israel the chance that a more permanent cease-fire deal will be reached is considered slim because of the many variables not dependent on Israel.

"These are the first talks, and at this stage we are not yet discussing a draft agreement," the senior political source said.

The issue of Shalit's release is part of the package proposal being mediated by Egypt, but it is not a central element. A senior political source reiterated that there has been no progress at this stage on the Shalit case, but he expressed hope that a new cease-fire formula might further a deal.

U.S., EU seek to include Hamas in peace process

The American government and the European Union are making efforts to include Hamas in a broader diplomatic effort that would include a long-term cease-fire with Israel, reconciliation among Palestinian factions and support for renewed negotiations with Israel on the basis of the Arab peace initiative.

According to the Saudi Arabian newspaper Al-Hayat reporting from Damascus, a U.S. official visiting Syria two weeks ago said that "the Hamas leadership has recently made important and interesting statements." The official added that the U.S. is following the Hamas stance and hopes that the group will alter its views and adopt a two-state solution.