GAZA/RAMALLAH -- Palestinians in the Gaza Strip and the West Bank rejoiced as leaders of rival Fatah and Hamas movement met in Cairo to sign the reconciliation agreement on Wednesday.

Hundreds of people gathered in downtown Gaza City, holding Palestinian flags and banners, welcoming the deal that wound end four years of political split between the Gaza Strip and the West Bank.

Similar gatherings took place in several West Bank cities, as local radios launched live coverage on the reactions in the streets.

Flags of Hamas and Fatah, as well as banners reading "People Toppled Division" were seen in the gatherings.

Meanwhile, the Palestinian official television resumed live coverage from Gaza for the first time in four years. Equally, the Hamas-run Al-Aqsa satellite channel also broadcasted live interviews from the West Bank. Officials from Hamas and Fatah were interviewed on the televisions of each other's.

The Egyptian-brokered agreement envisions the formation of a technocratic government to rule the Hamas-controlled Gaza Strip and the West Bank which was ruled by the Fatah-led Palestinian National Authority (PNA).

Palestinian split widened in June 2007 when Hamas seized control of Gaza by force.

The Palestinians see that the agreement is essential to support diplomatic quest to gain international recognition of statehood on the lands that Israel captured in 1967. Israel slammed the agreement and said that the Fatah-led PNA should choose either peace with Israel or peace with Hamas.

Palestinian Prime Minister Salam Fayyad in the West Bank said that the national unity was an internal Palestinian affair and that Israel should keep out of it.

The people celebrating on the streets on Wednesday also slammed the Israeli conditions, but many of them were afraid that obstacles may emerge when they implement the agreement on the ground in addition to external challenges.

"I hope they really take practical steps and succeed in implementing it," said Abu Al-Houda, an employee in his 50s.

Fadi Al-Sheikh Yousef, a member of the youths' movement that launched mass demonstrations against the split since March, said that the Palestinian people "will not accept any failure in implementing the articles of the pact."

However, Mahmoud, a government employee, said he expects the agreement not to hold for long and that the reconciliation will not complete, "because factional and partisan interests will emerge and the differences will return."

Samah Ahmed, 30, said she is afraid that Israel may intervene to block the reconciliation and that "the devil will have his touches on the details of the deal."

On Sunday, Israeli Finance Minister Yuval Steinitz said Israel decided to withhold the due transfer of tax and customs that Israel collects on behalf of the Palestinians, the PNA gets about two thirds of its annual budget from Israeli tax transfers.

Steinitz said that the withholding would last until Israel knows that the money will not end up in the hands of Hamas.

When Hamas, which doesn't recognize Israel, won parliamentary elections in 2006, Israel stopped cash transfers to the PNA, leaving it unable to pay salaries for its employees. Israel resumed the money transfers after Hamas took over Gaza by force and left the PNA's rule confined to the West Bank in June 2007.

The Palestinians fears that Israel may tighten its closure on the Gaza Strip and the West Bank in punishment of the new government that will be formed in the agreement with Hamas.

"Israel is unsatisfied by the Palestinians," said Tawfiq Abu Shomar, a Palestinian analyst, adding that the Palestinian unity leaves Israel without justifications to use when responding to pressure to resume peace talks.

Earlier on Wednesday, a Palestinian official said that the Palestinian leadership respected the agreements and obligations it signed with Israel and that the PNA and the Palestine Liberation Organization (PLO) "do not violate the basis and principles that the international community adopts."

According to sources, the Palestinian officials will start discussions to appoint a prime minister and members of the government immediately after they sign the pact, and they will later discuss the formation of a higher committee to lead PLO until elections for the organization's National Council is held.