Prospects for restarting the stalled Middle East peace process hit new uncertainty today when the Palestinian president, Mahmoud Abbas, decided to postpone crucial elections due to have been held in late January.

Officials said Abbas would accept the recommendation of the central election commission that parliamentary and presidential elections could not go ahead because of the opposition of Hamas, the Islamist movement that controls the Gaza Strip. Analysts said Abbas was effectively bowing to the inevitable in the face of insurmountable objections by Hamas — and to avoid formalising divisions between the West Bank and Gaza.

Postponement of the election follows an announcement by Abbas last week that he did not wish to seek re-election as president of the western-backed, Ramallah-based Palestinian Authority. That was widely seen as evidence of his despair at diminishing prospects for meaningful peace talks after the US changed tack to support Israel's view that settlement activity in the West Bank need not be frozen – as Palestinians demand – before negotiations can resume.

The US, Israel and western governments have all expressed concern that without Abbas an already moribund peace process would have no chance of recovery. Still, he remains chairman of the PLO and leader of Fatah, its largest component group.

Abbas unilaterally set the 24 January election date after Hamas refused to sign a reconciliation agreement drafted by Egypt following more than a year of intensive mediation efforts between the two hostile factions. Its prospects remain unclear, but postponement of the poll will at least avoid legitimising the damaging split between the two territories and their rival leaderships.

"Holding an election during a political separation will only increase the separation," Sami Abu Zuhri, a spokesman for Hamas, said.

The turmoil in Palestinian ranks adds to the enormous difficulties of relaunching talks with Israel — a priority for Barack Obama. On Wednesday Abbas used the fifth anniversary of the death of his predecessor, Yasser Arafat, to insist that he would not resume talks unless Binyamin Netanyahu, Israel's prime minister, backed down. Netanyahu has promised to exercise "restraint" on settlements but snubbed Obama by insisting that "natural growth" in existing Jewish outposts will continue. Abbas said that must also end, as must Israel's exclusion of east Jerusalem, which the Palestinians want as their future capital, from the scope of any peace deal.

"We cannot go to negotiations without a framework. And we say the framework is UN resolutions, meaning a return to the 1967 borders," Abbas said, referring to Israel's borders on the eve of the conflict that changed the map of the Middle East.