Egyptian-brokered talks over a longer-term truce between Israel and Hamas in post-war Gaza will continue despite uncertainty over who will form the next Israeli government, Israeli and Hamas officials said on Wednesday.

Hamas leaders have suggested that the growing clout of right-wing Israeli parties could prevent outgoing Israeli Prime Minister Ehud Olmert from closing a deal.

Tuesday's election in Israel ended in a political stalemate that could take weeks to sort out. Centrist Tzipi Livni, who has taken over from Olmert as leader of the Kadima party, has a narrow lead. But right-winger Benjamin Netanyahu seemed to many to have a better chance of forming a new coalition government.

Israeli officials, speaking on condition of anonymity, said talks in Cairo over the proposed 18-month truce would not be put on hold while Livni and Netanyahu fight it out to be nominated as premier by President Shimon Peres.

"The current government headed by Ehud Olmert has full authority until a new government is sworn in. You cannot have a power vacuum," a senior Israeli official said.

Egypt has proposed a staged process beginning with a ceasefire declaration, a deal to exchange prisoners, the opening of Gaza's border crossings with Israel and with Egypt and reconciliation talks between rival Palestinian factions.

If finalized, it would take the place of a shaky January 18 truce, declared unilaterally by both sides, after Israel's 22-day military offensive in the Hamas-ruled Gaza Strip in which about 1,300 Palestinians were killed. Fourteen Israelis have died since December 27, when the fighting broke out.

Since a ceasefire in the Gaza Strip would be a bilateral arrangement between Israel and Egypt, the senior Israeli official said the next government would have to abide by it.

HAMAS QUESTIONS

Osama Hamdan, Hamas's representative in Lebanon, said Olmert's government had made clear to Egypt that it wants negotiations to continue. But he questioned whether such an agreement would be binding on the next government, particularly if it is headed by Netanyahu.

"There is no doubt that we are watching things closely and with caution," Hamdan said.

Hamas spokesman Fawzi Barhoum said the group was awaiting Israel's position on some of the sticking points in the talks.

Israeli and Palestinian officials have sent mixed signals about the status of prisoner swap talks, which would be expected to intensify after the proposed ceasefire took hold.

Hamas has demanded that Israel release 1,400 Palestinian prisoners in exchange for Gilad Shalit, an Israeli soldier captured by Gaza militants in a cross-border raid in 2006. Diplomats said Israel was likely to free closer to 1,000.

Under the proposed ceasefire, Israel would open border crossings with the Gaza Strip, but it was unclear how soon and under what conditions. Olmert has hinged a full opening of the crossings on Shalit's release and has refused to offer Hamas guarantees that the passages will stay open.

Another sticking point has been Israel's insistence that certain materials be barred from entry because they could be used to make rockets, fortifications and explosives. These include certain types of steel piping and chemicals used in agriculture, Israeli defense officials said.

Hamas officials say they have demanded details about what would be excluded from entering the impoverished enclave, which will require massive amounts of steel, cement and other commercial goods to rebuild after the war.

Egypt and Israel have balked at Hamas demands that the terms of the deal be put in writing.