Palestinian President Mahmoud Abbas has said he will head a Palestinian unity government, after a second meeting with Hamas leader Khaled Meshaal.
The interim government is to prepare polls in the West Bank and Gaza Strip.
Mr Abbas and Mr Meshaal have been holding talks in Qatar over a reconciliation deal reached in April 2011 and who would head the government.
Correspondents say the issue has been one of the main stumbling blocks to implementing the agreement.
The April deal sought to end more than four years of separate governments in the Hamas-run Gaza Strip and the West Bank - areas of which are governed by Mr Abbas's Western-backed Palestinian Authority.
Israeli Prime Minister Benjamin Netanyahu criticised Mr Abbas's announcement, saying he had chosen to "abandon the way of peace" in reaching a power-sharing deal with Hamas.
Last month Israel and the Palestinian Authority held their first talks in more than a year, without making any apparent progress.
The line-up of the government will be announced on 18 February in Cairo, a Fatah official told the AFP news agency.
The government will be made up of technocrats and independents, reports say.
Mr Abbas says the two sides are serious about political unity.
Mr Meshaal added: "We inform our people that we are serious about healing the wounds... to reunite our people on the foundation of a political partnership, in order to devote our effort to resisting the [Israeli] occupation.''
As part of the agreement in April, an interim unity government was to prepare for presidential and parliamentary elections.
But Hamas strongly opposed Mr Abbas's initial choice of Salam Fayyad, the current prime minister of the Palestinian Authority in the West Bank.
The elections were expected to be held in May, but the Palestinian election commission says more time will be needed, Reuters news agency reports.
Fatah has historically been the dominant faction in the Palestinian national movement, but in January 2006 the Islamist militant movement Hamas won Palestinian Authority legislative elections.
The government subsequently sworn in was widely boycotted by the international community.
In early 2007 Fatah and Hamas agreed to form coalition to end growing factional warfare.
In June of that year Hamas seized control of Gaza by force. Gaza and the West Bank came under separate government, and Israel and Egypt tightened the blockade on Gaza.
Israel opposes the formation of a Palestinian unity government. It views Hamas as a terrorist organisation.
The Middle East Quartet of the United States, Russia, European Union and United Nations insists Hamas should renounce violence, recognise Israel and back past Israeli-Palestinian agreements before a Palestinian unity government can be recognised.