The Bush administration intends to curtail contacts with President Mahmoud Abbas's Fatah faction if it joins a Hamas-led government, Western diplomatic sources said on Monday.

The warning came as Fatah officials held talks in Gaza with Hamas over whether to join the government being formed by the Islamic militant group.

Fatah has so far said it has no intention of joining the government unless Hamas, whose charter calls for Israel's destruction, changes and political views but talks continue.

The US Administration is trying to isolate the Islamic militant group following its January 25 election victory, hoping to pressure Hamas to renounce violence, abide by interim peace deals and recognise Israel.

Washington is concerned that by bringing in members of a faction publicly committed to a negotiated peace with Israel, Hamas could soften its international image.

In recent meetings, US Officials told Abbas and other senior Fatah leaders that Washington opposed the faction joining the Hamas government, Palestinian officials said.

"Hamas can't whitewash its cabinet" by bringing in Fatah and other factions, said a diplomatic source.

The US has kept alive the possibility of renewing peace efforts through with the Fatah leaders.

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