Gaza City/Cairo - Talks in Cairo aimed at producing a Palestinian "national unity" government are still stalled on the issue of recognising Israel, a Hamas lawmaker said Wednesday.

Egyptian mediators hope to reconcile Hamas, which won Gaza's parliamentary elections in 2006, with President Mahmoud Abbas' Fatah movement in the West Bank to form a unified government, and to reform the Palestinian Liberation Organization (PLO).

Delegates have made progress over the past week. Near the end of the first round of talks over the weekend, a delegate from the Islamic Jihad faction said that an agreement had been reached on security. Factions have also agreed to hold new elections in January 2010, as scheduled.

But Mushiar al-Masri, a Hamas legislator from Gaza, told Deutsche Presse-Agentur dpa on Wednesday that the talks have stalled because of the condition that the new government must accept international demands that it recognize Israel.

Other obstacles, he said, include the Palestinian Authority's "decision-making policy, which is unstable because of external pressure and fully dependent on politicized foreign funds."

Al-Massri also said that the Palestinian Authority's continued arrestof Hamas supporters in West Bank contributed to the crisis.

Security forces under Hamas control have also arrested Fatah supporters in the Gaza Strip.

Hamas spokesman Ismail Radwan on Wednesday echoed al-Massri's remarks.

Fatah should "soften its stance on the controversial issues," he told dpa. "We will not agree to any government platform that includes recognition of Israel." (dpa)