Egyptian officials claim delegations from Fatah and Hamas have hammered out an agreement to form an interim Palestinian Authority unity government and fix a date for elections, Reuters reports.

"The consultations resulted in full understandings over all points of discussions, including setting up an interim agreement with specific tasks and to set a date for election," Egyptian intelligence said Wednesday in a statement.

A Hamas delegation was reported to be in Cairo on Tuesday for talks on Fatah-Hamas reconciliation.

The Hamas delegation met with Egyptian Foreign Minister Nabil el-Araby and members of the ruling military council in Cairo while, at the same time, PA Chairman Mahmoud Abbas sat down with an Egyptian diplomat in Ramallah.

According to WAFA, Abbas told Egyptian Ambassador to the PA Yasser Othman, "Egypt is the backbone of our people's aspirations toward having an independent state with Jerusalem as its capital."

Whether the reported reconciliation between bitter rivals Hamas and Fatah is sustainable is a dubious proposition.

The Fatah-Hamas rivalry became entrenched after Hamas won big in the last PA elections, which resulted in Abbas purging Hamas officials from the PA stronghold in Ramallah and Hamas violently seizing control of its own stronghold in Gaza.

The announcement comes as Abbas lobbies for the unilateral declaration of a PA state by the United Nations in September.

Many security officials have warned that allowing Hamas to return to prominence in the PA would lead to a Hamas takeover in Judea and Samaria, similar to that carried out in Gaza in 2007.

Israeli Prime Minister Binyamin Netanyahu responded to the report saying the PA could have peace with Israel or Hamas - but not both.