Prime Minister Rami al-Hamdallah on Tuesday chaired the first meeting of the Palestinian cabinet in Gaza for three years in a move towards reconciliation between the mainstream Fatah party and Islamist group Hamas.

Hamas seized the Gaza Strip in 2007 in fighting with Fatah forces loyal to President Mahmoud Abbas and has ruled the impoverished Israeli-besieged desert enclave of two million people since then.

The cabinet session was the first in Gaza since 2014, Hamdallah told his ministers, and a major step in a reconciliation process promoted by neighbouring Egypt and other U.S.-allied Arab countries.

"Today, we stand before an important, historical moment as we begin to get over our wounds, put our differences aside and place the higher national interest above all else," he said.

But while Hamas handed over administrative responsibilities to a unity government originally formed three years ago, its armed wing remains the dominant force in Gaza.

"We understand that returning official institutions to their legitimate and legal framework and ending all the impacts of division will require exhausting efforts and a lot of patience, of time and of wisdom," he said.

Abbas told Egyptian TV station CBC on Monday there could be only "one state, one regime, one law and one weapon” in the Gaza Strip, reiterating a long-held position that security should only be in the hands of the Palestinian Authority (PA).

Abbas is based in the Israeli-occupied West Bank and heads the PA government that administers limited self rule in the territory.

A PA spokesman said Abbas would not lift sanctions on Gaza at this stage but rather await the outcome of talks planned between Fatah and Hamas in the next two weeks.

Pressuring Hamas to loosen its grip on Gaza, he halted payments for Israeli-supplied electricity to the enclave in June, a step that has led to lengthy, daily blackouts. He also withheld salaries for Gaza civil servants.

"Everything must be in the hands of the Palestinian Authority, it must be the one to control the crossing points (in and out of Gaza)," he said. Israel maintain a partial blockade of Gaza, citing security concerns.

Under previous understandings, some 3,000 Fatah security men would be integrated gradually into a Gaza police force overseen by an Interior Ministry headed by Hamdallah. Hamas's armed wing, analysts say, has at least 25,000 well-equipped fighters.

The United States, which is trying to revive Israeli-Palestinian peace talks that collapsed in 2014, is watching developments closely with the aim of improving humanitarian conditions in Gaza, Jason Greenblatt, U.S. President Donald Trump's Middle East envoy, said on Twitter.

But Greenblatt said: "The United States stresses that any Palestinian government must unambiguously and explicitly commit to non-violence, recognition of the State of Israel, acceptance of previous agreements and obligations between the parties, and peaceful negotiations."

*This story was edited by Ahram Online.