The Islamic militant Hamas has won a landslide victory in Palestinian parliamentary elections, winning 76 of the 132 available seats - and immediately plunging Middle East peace prospects into crisis.
Mahmoud Abbas: Hamas win may not unseat him
The rival Fatah Party, which controlled Palestinian politics for four decades, won 43 seats.
Palestinian leaders, were stunned by the militant group's sweeping victory, and world leaders immediately responded by insisting that Hamas must renounce violence and recognise Israel's right to exist.
Fatah's central committee has said it will not join the Hamas-led government and had informed President Mahmoud Abbas.
The Palestinian President says he aims to continue efforts to reach a peace deal with Israel and would immediately start consultations on forming a new government.
"The new government will work according to Israeli-Palestinian agreements," Mr Abbas told a news conference in his first reaction to the Hamas victory.
But interim Israeli Prime Minister Ehud Olmert said he would not negotiate with a Palestinian government that includes Hamas.
Israeli politicians from across the political spectrum said there could be no relations with Hamas - a group that has been responsible for scores of deadly attacks against Israelis and is listed as a terror organisation by the European Union and the US.
Palestinian Prime Minister Ahmed Qureia and his Cabinet resigned this morning, even before the official results were announced.
The top Hamas leader, Khaled Mashaal, said his group is ready for a political partnership, despite its overall majority. His statement reflects concern within the party about the strategic consequences of leading a government.
In an early sign of pragmatism, Mahmoud Zahar, a top Hamas official, said the group would extend its year-old truce if Israel reciprocates.
"If not, then I think we will have no option but to protect our people and our land," he said.
US President George Bush said that the US will not deal with Palestinian leaders who dispute Israel's right to exist. "If your platform is the destruction of Israel, it means you're not a partner in peace, and we're interested in peace," Mr Bush said.
Mr Abbas, who was elected separately a year ago and remains president, has said he would resign if he could no longer pursue his peace agenda.
The Cabinet and legislature must approve any major initiative by Mr Abbas, giving Hamas a powerful influence over peace moves.
Hamas supporters streamed into the streets to celebrate. In the southern Gaza town of Rafah, supporters shot in the air. Others sounded horns and waved Hamas flags from car windows.
Supporters of the two main parties briefly scuffled in the West Bank town of Ramallah after Hamas supporters raised their party's green flag over the Palestinian parliament.
AP