Palestinian rival factions Hamas and Fatah have reached a deal over political reconciliation, Hamas leader and former prime minister Ismail Haniya said in a statement on Thursday, without providing further details.

Further information will be announced at a noon news conference (10GMT) in Cairo, where unity talks between the rival factions began on Tuesday.

"Fatah and Hamas reached an agreement at dawn today upon a generous Egyptian sponsorship," Haniya said in a statement.

The Western-backed mainstream Fatah party lost control of Gaza to Hamas in fighting in 2007. But last month Hamas agreed to cede powers in Gaza to President Mahmoud Abbas' Fatah-backed government in a deal mediated by Egypt.

The meetings in Cairo are centred around implementing the 2011 Cairo Agreement between the two political parties, in hopes of ending the 10-year political schism.

A party to the negotiations, who asked not to be identified, told AFP news agency the agreement would see forces of the West Bank-based Palestinian Authority, which is dominated by Fatah, take control of the Rafah border crossing between Gaza and Egypt.

He added all Palestinian factions would begin wider negotiations on the formation of a national unity government in the coming two weeks.

Egypt has been eager to improve security in the Sinai Peninsula that borders Gaza, where fighters launched a long-running campaign of attacks.

Last month, Hamas agreed to cede civil power in Gaza to the Palestinian Authority, but the fate of its vast military wing remains a significant issue for the two sides.

An Egyptian source close to the talks said intelligence chief Khaled Fawzi had followed the discussions closely.

The 2011 agreement stipulated that legislative, presidential and national council elections should be conducted within one year of its signing. The deal would see both Hamas and Fatah form a Palestinian government to appoint the prime minister and ministerial positions.

Over the last few months, Hamas has been under heavy pressure from Abbas' measures against Gaza, aimed at pressuring Hamas to relinquish control of the territory. Punitive measures included cutting the salaries of PA employees living in Gaza and requesting Israel to reduce the electricity supply to the territory.

The deal could temporarily ease Gaza's dire humanitarian situation.