A surprise deal to end decades of rivalry between Fatah and Hamas was welcomed by the Palestinian leadership yesterday, but denounced by Israel as crossing “a red line.”

The agreement, announced in Cairo on Wednesday, saw the secular Fatah party which dominates the West Bank-based Palestinian Authority and Gaza’s Islamist rulers agree to form a transitional government ahead of elections, within a year.

The announcement provoked a chorus of condemnation from the Israeli leadership, who said it would harm chances for peace, but Hamas said it had no plans to stop Fatah from holding negotiations without its participation.

Top Hamas and Fatah officials involved in the Cairo talks said the breakthrough had come about as a result of both the impasse in peace negotiations with Israel and the ongoing upheaval in the Arab world.

Senior Hamas official Mahmud Zahar pointed to “a change in the (regional) political environment, and the failure in negotiations,” while Azzam al-Ahmed, who headed the Fatah delegation, agreed the Arab Spring “put pressure” on both factions.

Wednesday’s deal, which came after 18 months of fruitless talks, will see the two parties work together to form an interim government of independent politicians chosen by both sides, Mr Ahmed said.

“This government will be tasked with preparing for presidential and legislative elections within a year,” he said by phone from Cairo.

Hamas officials said the parties would return to Cairo on Wednesday to sign the document, which also lays out terms for the release of political detainees by both sides.

Mr Zahar also said the two factions had settled their differences on security, a key issue which has bedevilled the past 18 months of negotiations.

And Mussa Abu Marzuk, a top member of Hamas’s exiled leadership in Damascus, told reporters consultations on the interim government would begin after next week’s signing ceremony.