Khaled Meshaal (left) and Mahmoud Abbas had been set to meet in Cairo on TuesdayA scheduled meeting between Palestinian President Mahmoud Abbas and Hamas leader Khaled Meshaal has been postponed, officials say.
Tuesday's talks in Cairo, Egypt, had been aimed at reaching consensus over a new reconciliation government.
But continued disagreements meant the talks had been postponed indefinitely, said Fatah officials in Ramallah.
The delay has cast doubts on last month's unity deal between Hamas and Fatah aimed at ending a four-year rift.
The split has left the Palestinians with rival governments in the Fatah-governed West Bank and Hamas-controlled Gaza Strip. The unity agreement is intended to pave the way for a joint interim government ahead of national elections next year.
EU foreign policy chief Catherine Ashton and Israeli Prime Minister Benjamin Netanyahu met in Jerusalem, discussing how to relaunch peace talks between Israel and the Palestinians.
The talks are deadlocked over the issue of Jewish settlements in the occupied West Bank and East Jerusalem.
Ms Ashton's talks coincided with an announcement by the planning committee of Israel's interior ministry that it had approved the expansion of 2,000 homes in East Jerusalem's Ramat Shlomo settlement district.
The committee said it allowed each home to add a room.
Almost 500,000 Jews live in settlements on occupied territory. The settlements are illegal under international law, though Israel disputes this.
Fayyad rejected"The [Cairo] meeting has been postponed until a new date is set in the coming days in order to assure the best atmosphere for the successful implementation of the reconciliation agreement," Fatah's Azzam al-Ahmed was quoted as telling AFP on Sunday.
Earlier this week, the Islamist movement Hamas rejected Fatah's nomination of Salam Fayyad - who heads the Palestinian Authority government in the West Bank - as prime minister in a transitional government.
Hamas' rejection of the US-educated economist's nomination could compromise foreign support for the new government, correspondents say. Hamas is designated a terrorist group by Israel, the US and the EU.
Under the deal signed in May, the first step was to form an interim government of technocrats whose task will be to work on reconciliation and prepare for new elections.
Leading members of Hamas and Fatah had said they would stay out of this government in the short term.
Israel has expressed disapproval of the move and suspended tax transfers to the Palestinian Authority, with the Israeli finance minister saying payments would be stopped until it was clear money would not go to militants in Hamas.
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