Egypt has ceased efforts to mediate the formation of a national unity government between the rival Palestinian factions Hamas and Fatah, Israel Radio reported on Saturday.

Officials who met with the senior echelon of Egyptian intelligence said that Cairo is instead proposing that two separate governments ? the Hamas regime in Gaza and the Fatah-led Palestinian Authority in the West Bank ? continue to function until general elections are held.

In parallel, Egypt would like to see the Palestinian factions agree on the formation of a committee that will lay the groundwork for the next elections as well as the rehabilitation of the Gaza Strip, Israel Radio reported.

Hamas has informed the Egyptians that it is demanding that Fatah release all of the group's members that are currently in Palestinian Authority prisons before the resumption of reconciliation talks in Cairo, which is scheduled for to take place in two weeks.

Hamas says that if its members are not released, it will boycott the Cairo talks, Israel Radio reported.

Palestinian President Mahmoud Abbas, in comments published Saturday, says he will accept any Egyptian proposal on reconciling Palestinian factions that "would end the siege on the Palestinian people."

Abbas said he had instructed delegates from his faction, Fatah, to accept any Egyptian proposal on talks with Hamas that would end the siege on the Palestinian people in the Gaza Strip, in remarks published by the Egyptian magazine October.

"Egypt is the only country that knows how to deal with the Arab-Israeli conflict," said Abbas, adding that he would not accept any other country as a mediator.

A sixth round of Egyptian-brokered talks between Fatah, which controls Palestinian-administered areas of the West Bank, and Hamas, which controls the Gaza Strip, adjourned without agreement two weeks ago. Another round is scheduled for July 25.

Last week, senior Egyptian intelligence officers went to Syria and the West Bank to meet with representatives of Palestinian factions there, amid reports that Egypt, Syria and Saudi Arabia would join forces to press rival Palestinian groups to come to an agreement.

Abbas said that the Palestinian Authority believes that fresh elections, supervised by Arab and international observers, would resolve differences among Palestinian groups.

Hamas and Fatah postponed discussion of such outstanding disagreements as the conduct of elections and control of the security services because each side continues to accuse the other of arresting its members in the territories the other controls.

In the run-up to the sixth round of talks, Hamas had said Fatah must agree to release all Hamas members in West Bank jails before it is prepared to strike an agreement on any other outstanding issue.

Abbas on Saturday repeated Fatah's denials that its security services' arrest of Hamas members in the West Bank was politically motivated. Fatah's security forces arrest Hamas members on criminal charges such as possessing weapons or money-laundering, he said.

He noted that many Hamas leaders were in Ramallah during Israel's January bombardment of Gaza, and that Fatah security forces did not arrest them then.