The Hamas-led Palestinian Authority government resigned Thursday to make room for a new Hamas-Fatah coalition.

President Mahmoud Abbas travelled to Gaza Thursday and met with Prime Minister Ismail Haniyeh of Hamas, who handed in his resignation. Abbas was expected to then authorize Haniyeh to form a new coalition government.

This follows an agreement in principle reached last week in Mecca between Hamas and Fatah for power-sharing. A power struggle in Gaza has killed more than 130 people since May, injured hundreds and caused millions of dollars in damage.

U.S. State Department spokesman Sean McCormack said Thursday the U.S. would not make judgments about the unity government before it is formed and has an official platform. The Bush administration also will watch the government's actions once it takes office, he said.

However, aides to Abbas said he was told by U.S. assistant secretary of state David Welch that the U.S. would not deal with the government.

U.S. officials have said Hamas must adhere to the principles laid out by the so-called Quartet of Mideast mediators: recognize Israel, renounce violence and back previous peace deals with Israel.

Israeli Prime Minister Ehud Olmert said earlier that Israel is not happy with the coalition agreement but that he was against cutting off ties with Abbas.

"[Abbas] was elected directly and his authority derives from this. I don't see anything to deter a meeting with [Abbas]. He is committed to the Quartet principles and the road map [peace plan]."

Palestinian officials are hoping the power-sharing agreement will lift international sanctions that were imposed after Hamas' election last year.

With files from the Associated Press