TEL AVIV //Fatah asked Hamas yesterday to postpone a crucial announcement on the make-up of a unity government amid disagreements over its leadership.

The rival Palestinian groups were due to meet tomorrow to publicly announce the formation of the new government, almost two months after they struck a surprising pact aimed at ending their years-long bitter feud.

But last week Hamas rejected Fatah's nomination of Salam Fayyad, a respected economist and the current prime minister of the West Bank-based Palestinian Authority, to serve as the new government's prime minister.

Fatah dominates the Palestinian Authority while Hamas rules Gaza.

Azzam Al Ahmed, head of the Fatah delegation to unity talks in Cairo, said Fatah had asked Hamas and the Egyptian leadership, which has been mediating the unity talks, to postpone the meeting by several days.

Other Fatah officials said disagreement over Mr Fayyad was the reason for the delay.

Fatah's leader, Mahmoud Abbas, clinched the unity deal with Hamas partly because of what analysts said was his disappointment with the deadlock of peace talks with Israel.

Israel considers Hamas a terrorist organisation and has threatened that it would not renew negotiations unless Mr Abbas backed out of the unity agreement.

Officials from the US and European Union have been stepping up their bids in recent weeks to reignite the peace process.

Catherine Ashton, the EU's foreign policy chief, met the Israeli prime minister Benjamin Netanyahu yesterday to persuade him to make concessions that would restart talks.

Baroness Ashton is due to brief the EU's foreign ministers in Luxembourg today on her visit to the Middle East, where she also met the Egyptian and Palestinian leaders.

Her trip also comes just days ahead of an expected meeting of the Middle East Quartet - made up of the EU, US, United Nations and Russia - on Friday to hold discussions on how to advance the peace process.

In parallel to Lady Ashton's visit, two top US officials - the acting Middle East envoy, David Hale, and the senior White House adviser, Dennis Ross - are also in the Middle East in an effort to advance Washington's bid to renew the peace process.

On Friday, Mr Abbas met Lady Ashton in the West Bank town of Ramallah and called on the EU to support the Palestinian bid for statehood recognition from the United Nations in September.

The EU has not yet indicated how it would act should such a vote take place at the UN.

Saeb Erekat, a veteran Palestinian peace negotiator, told reporters that "the dialogue remains open" on whether the EU would back the Palestinian plan.

The EU has nevertheless tried to renew the peace process by attempting to persuade Israel and the Palestinians to meet at a peace conference in Paris and launch negotiations based on Israel's borders before the 1967 war, when it occupied the West Bank and Gaza Strip.

Israel has using its Pre-1967 frontiers as the basis for negotiations, saying returning to those borders would leave it unable to defend itself.

Israel has also been stepping up its diplomatic campaign against the Palestinian bid for the UN's statehood recognition.

Last week, Israel's far-right foreign minister Avigdor Lieberman threatened that Israel would renounce all past agreements with the Palestinians if they continue their bid for UN recognition.

The Palestinians have said they would prefer to return to negotiations with Israel rather than move forward in their unilateral bid for UN recognition of their statehood.

However, they refuse to renew talks unless Israel stops construction in Jewish settlements in the West Bank.

Israel has repeatedly indicated that it will not halt such expansion. Ehud Barak, the Israeli defence minister, said on Friday that there was "no real way to announce an end to construction".

Referring to the rapid growth of Jewish families in the West Bank, he said: "There are half a million people living there. They need a new kindergarten every week."

Mr Barak said European governments needed to tell the Palestinians to "come to grips with reality" in terms of their demand for a settlement moratorium.

He said that settlements "are not the real issue when it comes to negotiations".