Israel said on Monday (September 11) that a Palestinian unity government could create new momentum for peacemaking but only if it recognised Israel, renounced violence and ensured the release of an abducted soldier. Palestinian President Mahmoud Abbas said he had reached an agreement with Prime Minister Ismail Haniyeh of Hamas over formation of a unity government. Hours after the announcement Abbas met with delegations from various Islamic factions in the Gaza Strip in show of unity. But shortly after Abbas's statement the Hamas Islamist group said it would never recognise Israel, raising immediate questions over whether a unity coalition would satisfy Western demands for lifting sanctions. Israeli Foreign Minister Tzipi Livni said what mattered was whether the unity government met the West's three conditions for restoring aid. She urged the international community not to waver in demanding acceptance of those terms. Livni said the main question was whether "we are seeing a real change here, or an attempt to buy an entry ticket to the United Nations at a cheap price?" Abbas would decree the existing Hamas-led government a caretaker administration within 48 hours, an aide said. Hamas officials said they wanted Haniyeh to head the unity cabinet. Palestinians hope the creation of a unity administration will lead to the lifting of a Western aid embargo imposed after Hamas took power in March after a surprising win over Abbas's Fatah movement in January elections. The United States and the European Union have said they would work with such a government only if it met their three conditions for restoring aid -- recognising Israel, renouncing violence and accepting past interim peace deals. The moderate Abbas, in Gaza where he announced the deal, gave no details on the political agenda of the unity government. Hamas spokesman Sami Abu Zuhri said it would be based on a document the Islamists and Abbas agreed in June, which fell short of Western and Israeli demands. That document stemmed from a manifesto drafted by Palestinian prisoners in Israeli jails which hinted at recognition of Israel by calling for a Palestinian state on land captured by the Jewish state in the 1967 Middle East war. But Hamas's own position was unchanged, Abu Zuhri said. "Hamas will continue to have its political agenda ... we will never recognise the legitimacy of the occupation," Abu Zuhri said, using the Hamas term for Israel. Fatah seeks a Palestinian state in Gaza and the occupied West Bank, land which Israel captured in the 1967 war. Hamas wants to replace Israel with an Islamic state. Besides suffering under the aid embargo, Palestinians had feared a return to the violent power struggle that followed Hamas's election win if unity talks had failed. The Hamas administration has come in for increasing criticism and faced strikes throughout the Palestinian territories by workers angered at the non-payment of salaries for the past six months. Both Abbas and Haniyeh urged an end to the stoppages. President of the Jerusalem Media Communications Center (JMCC) Ghassan al-Khatib was optimistic the new government would bear fruit both internally and in the international arena. "This announcement of a national unity government is good news for the Palestinians because it will reduce the tension between the main parties and the friction it will also allow for more efficient goverment of the kind that will have more efficiency and more transparency. "It will also allow for political platform which hopefully will enable the international community to resume the aid and support to the Palestinian people and hopefully will enable the Quartet to resume political efforts towards resuming a political process and bilateral negotiations of the kind that can help ending this occupation in return for peace," said al-Khatib.