Hamas were boycotted by Western countries

US consul-general in Jerusalem Jacob Walles said there were no obstacles to re-engaging with the new government, which would have full US support.

Palestinian President and Fatah leader Mahmoud Abbas is expected to swear in a new prime minister on Sunday.

He sacked the Hamas-led government after clashes left more than 100 dead.

On Saturday, violence between the rival factions spread from Gaza to the West Bank, as Fatah gunmen stormed the Hamas-controlled Palestinian parliament building in Ramallah.

Quartet backing

Mr Welles met President Abbas on Saturday and said afterwards that he expected announcements in Washington about "our assistance and about the financial regulations" early next week.

Residents of Ramallah worried over future

In pictures



"There won't be any obstacles, economically and politically, in terms of re-engaging with this [emergency] government," he told Reuters news agency.

The quartet of Middle East peace mediators - the US, Russia, the United Nations and the European Union - has also said it backs the decision to dissolve the Hamas led-administration.

Western nations imposed sanctions on the Palestinians after Hamas, considered a terrorist organisation by the US and EU, won elections in January 2006.

Hamas has denounced the move to form an emergency administration as illegal.

Last week, it ousted Fatah from Gaza after a week of fierce fighting.

On Saturday, Fatah gunmen seized the parliament building in Ramallah in the West Bank.

Second deputy speaker Hassan Khuraishah, an independent, told the BBC he had been beaten up as he tried to prevent Fatah gunmen from raising their flag.

In a show of strength, Fatah supporters paraded around Ramallah, firing weapons into the air and chanting "Hamas out".

Almost all Hamas politicians and prominent supporters in Ramallah have either fled or gone into hiding.

Fatah supporters also took over the Hamas-controlled legislative council in Nablus.

Fleeing Gaza

Meanwhile, hundreds of Fatah supporters are reported to have been fleeing Hamas-controlled Gaza by land and sea.

SALAM FAYYAD Born in 1952 near West Bank city of Tulkarm Holds a PhD in economics from the University of Texas Worked at the World Bank in Washington from 1987-1995 IMF representative to Palestine until 2001 Finance minister under the Fatah-controlled administration from 2002-2005 Credited with cracking down on official corruption

Profile: Salam Fayyad Gazans tell of fears

Gaza, and the much larger West Bank, are just 45km (30 miles) apart, but correspondents say they now look poised to function as two separate territories.

President Abbas declared a state of emergency when he sacked the government of Ismail Haniya on Thursday.

Mr Abbas has said he will rule by presidential decree until conditions are right for early elections.

His nominee for prime minister, Salam Fayyad, is a former World Bank economist, whose impending appointment Israel has welcomed.