Reacting to news that rival Palestinian factions Fatah and Hamas had agreed to a reconciliation deal, the Obama government said any Palestinian unity government must accept Israel's right to exist and renounce terrorism -- conditions that Hamas does not meet.

The surprise deal to form an interim government and hold general elections within a year was reached Wednesday in secret negotiations in Cairo between the two sides, according to reports. A formal announcement of the reconciliation reportedly will be made next week.

“All points of differences have been overcome," said Taher Al-Nono, a Hamas spokesman in the Gaza Strip, according to Reuters.

The two sides have been at odds since Hamas violently ousted Fatah from the Gaza Strip in 2007. Fatah, which dominates the Palestinian Authority, rules in the West Bank, while Hamas rules in Gaza.

Israel has a working relationship with Fatah but has no direct contact with Hamas, a designated terrorist organization that remains sworn to Israel’s destruction.

Reacting to news of the reconciliation, Israeli Prime Minister Benjamin Netanyahu said Israel could not carry out peace negotiations with a government that includes Hamas.

"You can't have peace with both Israel and Hamas," Netanyahu said of the Palestinian Authority. "Choose peace with Israel."

Tommy Vietor, the U.S. National Security Council spokesman, said the White House had seen news reports of the deal and was seeking more information.

"As we have said before, the United States supports Palestinian reconciliation on terms which promote the cause of peace," he said. "Hamas, however, is a terrorist organization which targets civilians."

Vietor referred to conditions set by the Quartet, the U.S.-guided diplomatic grouping that also includes Russia, the United Nations and the European Union.

"To play a constructive role in achieving peace," he said, "any Palestinian government must accept the Quartet principles and renounce violence, abide by past agreements and recognize Israel's right to exist."