Salam Fayyad could survive as prime minister of a new Palestinian government to be agreed by Fatah and Hamas if the rival groups continue to show the flexibility that brought about their surprise unity deal.

While the Islamist Hamas has expressed opposition to his leadership, at least one senior Hamas official, Izaat al-Rishq, has been quoted as saying that the idea of him remaining prime minister in the new government would be studied.

Removing the internationally respected former World Bank economist from office now makes no sense to his supporters.

They argue that Fayyad's standing abroad is a major asset to the Palestinians as they aim to seek recognition of their statehood from the U.N. General Assembly in September.

Fatah and Hamas signed a deal in Cairo last week to end their four-year rift and are due to begin talks on forming a new government of technocrats next week which will reunite the now-divided administrations in the West Bank and Gaza.

Cairo has the leverage to secure a rapid agreement, diplomats say. Its promise to fully open the Rafah crossing between Egypt and Gaza, ruled by Hamas since 2007, depends on the conclusion of an agreement on the new cabinet, they say.

Palestinian President Mahmoud Abbas, also the head of Fatah, wants the independent Fayyad to stay on in his post, said Palestinian officials in Ramallah, speaking on condition of anonymity because Abbas has yet to publicly declare his view.

Sami Abu Zuhri, a Hamas spokesman in Gaza, said Fayyad was not acceptable to Hamas, but the movement has not repeated its earlier allegations that Fayyad was a puppet of the West.

The Islamist movement, keen to see Gaza rebuilt from a war more than two years ago, may see advantages to Fayyad's appeal to Western donors since their support is vital to the success of the new government.

Israel is already refusing to hand over tax funds to Abbas because of the deal with Hamas, which does not recognise Israel, and the resulting cash shortfall has prevented the Palestinian Authority from paying public sector salaries for April. Western donors could follow suit if they thought Hamas had too large an influence over any new administration.

"NEITHER LOGICAL OR USEFUL"

Fayyad's leadership of a government could help secure the continued flow of aid, his supporters argue.

They also say Fayyad is synonymous with an institution building project, or "The Fayyad Plan", that has become a major part of the Palestinians' strategy in the last two years.

The World Bank said in April the Palestinians were well positioned to establish an independent state.

With peace talks at a standstill, Abbas plans to seek a U.N. General Assembly vote recognising Palestinian statehood in September. A newspaper run by Akram Haniyeh, a close confidante of Abbas, argued that Fayyad was important to that initiative.

"It is neither logical or useful for him to disappear from his position in the final, definitive months," it said in a frontpage article believed to reflect Abbas's thinking.

Asked by journalists on Wednesday about his prospects of staying in the position, Fayyad did not answer. Abbas has also been silent in public on the question.

Fayyad does not enjoy universal support in Fatah, where some members see him as a rival to their movement.

But that will not bother Abbas, who appointed him in 2007 after the Gaza takeover and dismissed a call from senior Fatah officials for his removal in March.

"So far the candidate is Salam Fayyad because Hamas has not rejected him, but said he is under study," said Hany al-Masri, a Palestinian political commentator who has been closely involved in the reconciliation efforts.

"Hamas wants to show itself in a positive light," he added.