Palestinian President Mahmoud Abbas of the mainstream Fatah movement and Khaled Meshaal, leader of the militant Hamas group, signed the accord at a ceremony hosted by Saudi King Abdullah in a palace overlooking the Kaaba, Islam's holiest shrine.

The deal sets out the principles of the coalition government, including a promise that it will "respect" previous peace deals with Israel, delegates said. It also divvies up Cabinet posts in the new government.

Announcing the agreement at the ceremony, Abbas aide Nabil Amr read a letter in which Abbas designated Prime Minister Ismail Haniyeh, of Hamas, to form a new government platform according to the formula agreed on in the talks within five weeks.

Before the ceremony, a Hamas delegate said the deal set the outlines of the new government's political platform, including a provision by which the factions, including Hamas would "respect" previous peace deals between the Palestinians and Israel. The delegate refused to be identified because he was giving the information before the formal announcement.

The outlines will also be based on a document drawn up last summer by Hamas and Fatah activists jailed in Israeli prisons. The document calls for a Palestinian state in the West Bank, Gaza and east Jerusalem, the areas Israel captured in the 1967 Mideast War.

In drawing up the new government, Hamas is to propose an independent candidate to hold the crucial post of interior minister, who would control the Palestinian security forces. Abbas would then approve the candidate. The Interior Ministry post was one of the main obstacles to the deal as each side loathes seeing it in the hands of the other.

CNN