Fatah, headed by the Palestinian President Mahmoud Abbas, and Hamas have been bitterly divided since Hamas took control of Gaza in May 2007.

So far there have seven rounds of dialogue, with no breakthrough.

The Egyptians have twice postponed the scheduled date for a signature as the row between the factions has festered.

But Khaled Mashaal's latest visit to Cairo is thought to be significant.

The Syrian-based Hamas leader is coming to give his side's response to a written Egyptian proposal on how they might finally come to an agreement.

Prisoner issue

The initiative calls on the two factions to form a joint committee to co-ordinate between Hamas-ruled Gaza and the West Bank run by the Mr Abbas and his Fatah party.

It sets out the deployment of a 3,000-strong security force in the Gaza Strip, and plans for general presidential and legislative elections in June 2010.

Fatah has accepted the initiative in principle, but other factions have since expressed reservations.

One of the main stumbling blocks is the issue of prisoners.

In the past both sides have accused the other of targeting their respective supporters.

Now each faction will be required under the agreement to supply a list of prisoners it is currently holding with a view to most of them being released when a pact is signed.