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Palestinian leaders met a key candidate for prime minister in Gaza on Saturday, suggesting progress was being made toward naming a unity government that could overcome a Western aid blockade, officials said.

It was the first time Palestinian Authority Chairman Mahmoud Abbas and Prime Minister Ismail Haniyeh of the ruling Hamas faction had met together with Mohammed Shabir since he agreed last week to be nominated to head a joint government.

None of the leaders made any statements after the hour-long meeting held at Abbas's office in Gaza, in which the leaders had been expected to exchange views on policy issues.

However, Abbas adviser Nabil Abu Rudineh told Al Arabiya television after the talks he hoped talks for a unity government would be concluded later this month. A Hamas official said the same earlier on Saturday.

Shabir, 60, a former head of the Islamic University in Gaza, is seen as close to Hamas. Though he has agreed to be named, Shabir has not yet been formally nominated as prime minister.

Palestinian negotiators have made progress on other fronts toward piecing together a unity coalition, having agreed to divide up 24 ministries, though they have yet to decide on which portfolios each party would hold, officials have said.

Abbas met with Prime Minister Ismail Haniyeh of Hamas this weekend for another round of talks on a unity government. Abbas' office said the two leaders agreed to hold more talks.

A senior Palestinian official told Haaretz before the meeting with Shabir that Abbas was to present the candidate with his diplomatic proposals and his expectations of the new unity government, and expected Shabir to reply as to whether or not he could meet them.

Among other things, Abbas expects the new government to accept the two-state solution along the 1967 cease-fire lines, the U.S.-drafted road map for peace, and the "Prisoner's Document."

The document, penned by Palestinians in Israeli jails, calls for a Palestinian state within the 1967 lines, and endorses attacks on Israelis, but only within the West Bank and Gaza.

The document also recognizes the PLO as the sole legitimate representative of the Palestinian people, and calls for Hamas and Islamic Jihad to join its institutions.

Hamas agreed to the document in June after amendments.

A senior Palestinian negotiator said Friday that the Hamas-controlled government will resign within two or three days to make way for the new unity government.

The negotiator took part Thursday in a nighttime meeting in Gaza where Abbas, of Fatah, and Haniyeh, of Hamas, pressed forward with efforts to bring their rival factions together. He spoke on condition of anonymity because the meeting was not public.

Palestinian sources told Haaretz that if the two sides were able to reach an agreement on all outstanding issues, Haniyeh would tender his resignation and Abbas would then announce the appointment of Shabir as prime minister.

Meanwhile, Abbas also plans to meet with exiled Hamas leader Khaled Meshal this month to iron out problems preventing the formation of a Palestinian unity government, a senior Hamas official said Thursday.

Palestinian officials familiar with the negotiations expect the next government to be composed of roughly eight Hamas members, five to six from Fatah, five to six independents and four representatives of parliamentary blocks.

The foreign minister is likely to be from Fatah while the interior minister will be from Hamas, they said.

Zahar: Formation of unity government depends on ending int'l boycottThe Palestinian foreign minister, Mahmoud Zahar of Hamas, stressed Friday that the formation of a national unity government hinges on international guarantees to end the boycott against and siege on the Palestinians.

"Unless a decision to break the siege on the Palestinian people is taken, the national unity government will not be formed and the current government will go on unchanged," Zahar told reporters in Damascus, where he stopped for several hours on his way from Iran to Saudi Arabia to attend a meeting of foreign ministers of Islamic countries.

"Hamas' commitment now is to the prior decision with an international guarantee to lift the siege," he said, adding that an agreement on a unity government would be announced outside of Palestinian Authority territory.

Abbas said Wednesday that the United States had assured him that the formation of a Palestinian unity government would bring the end of its political and aid embargo on the PA, and of Israeli military operations in the Gaza Strip. Abbas made the remarks to the London-based newspaper Al-Sharq al-Awsat.

The West imposed sanctions on the Hamas government after it took power in March to force the Islamist group to recognize Israel, renounce terrorism and accept past accords.