The rival Fateh and Hamas factions were set to start reconciliation talks after the Islamists in the Gaza Strip on Thursday welcomed a call from Palestinian President Mahmoud Abbas for national dialogue.

A year after the Islamists seized power in Gaza causing a political and territorial split, their political head in Gaza, Ismail Haniyeh, said he welcomed the chance to talk as soon as possible.

"We welcome the call by President Abbas to hold a national dialogue and the new positive spirit in his speech, and we state that our hand reaches out for national unity," Haniyeh said.

The US-backed Abbas on Wednesday unexpectedly called for talks with Hamas, which ousted his Fateh Party from the Gaza in June 2007 after deadly factional fighting.

"We call for the immediate launch of a national dialogue based on the Yemen initiative" that foresees a return to the situation in the Gaza prior to the Hamas takeover, Haniyeh said.

He said Hamas was ready to be flexible to ensure that the dialogue succeeds, and he asked Fateh to do the same.

"We urge the Arab League to sponsor this dialogue and reconciliation, as it did with our Lebanese brothers," Haniyeh said, adding that the talks should take place on the understanding that there was "neither victor nor vanquished".

The Arab League oversaw a deal struck on May 21 in the Qatari capital of Doha between rival Lebanese politicians, ending an 18-month crisis that erupted into street battles that killed 65 people.

Abbas also wants the talks to be based on the Yemeni-brokered reconciliation deal which Hamas and Fateh reached in March but failed to implement amid disagreements over its conditions.

He had insisted the talks could only start after a return to the political status quo that existed before Hamas seized Gaza - a condition the Islamists rejected.

But Abbas made no mention of this condition in his speech Wednesday and tactfully referring to the Hamas takeover as "divisions" rather than a "coup". His proposal came as peace talks between the Palestinians and Israel - which Hamas opposes - have made no progress despite both sides' stated intention of reaching a deal this year.

Abbas' office said he briefed US Secretary of State Condoleezza Rice on his initiative in a phone call on Thursday before Haniyeh’s television speech.

In Wednesday's address marking the 41st anniversary of the 1967 Middle East war that ended with the occupation of Palestinian territories, including East Jerusalem, Abbas had harsh words for Israel.

"Peace and security... cannot be attained through swords of occupation or bulldozers of settlements. The Israeli decisions to annex Jerusalem and build settlements in the city and in the West Bank, along with the separation 'apartheid' wall, are void and null," he said.

Abbas also demanded Israel lift its crippling blockade of Gaza, which he called "a war crime" against the Palestinians.

Israel says its almost daily attacks against the impoverished territory and the blockade aim to force Hamas to end rocket and mortar attacks by fighters.

On Thursday a mortar attack, claimed by Hamas, killed a man and wounded four more Israelis in a kibbutz in southern Israel.

Hours afterwards a four-year-old Palestinian girl was killed in an air raid on Gaza that Israel said targeted armed gunmen in the area from which the mortar attack originated.

Israel, which officially opposes any direct talks with Hamas, like Washington avoided publicly criticising Abbas for reaching out to his rivals.