A long-awaited Palestinian unity government took oath before president Mahmud Abbas on Monday after a landmark reconciliation deal with Islamist movement Hamas that has infuriated Israel.

Following a ceremony at the Muqataa presidential compound in Ramallah, Abbas hailed "the end" of a bitter and sometimes bloody divide between his Fatah movement and rival Hamas, which rules Gaza.

Hamas applauded the new government as representing "all Palestinians," saying it was a "turning point" in its relations with Fatah.

But a question mark remains over how the world will respond to the new Palestinian cabinet, the product of an internal agreement between Fatah and Hamas, which has been blacklisted by Washington and the European Union as a "terror organization".

Standing on a red carpet lined with Palestinian flags, the new ministers filed past, each laying their hand on either a Koran or a Bible to take the oath of office as Abbas stood by.

It is the first Palestinian unity government for seven years, and the first fruits of the landmark April reconciliation deal.

"Today, with the formation of a national consensus government, we announce the end of a Palestinian division that has greatly damaged our national case," Abbas said.

"This black page in history has been turned forever," he said in remarks echoed by the outgoing Hamas government in Gaza.

"We hail the national consensus government, which represents all the Palestinian people," Hamas spokesman Sami Abu Zuhri told AFP, describing it as "a turning point".

Hours earlier, a dispute over the fate of the prisoners' ministry threatened to delay the swearing in, but it was resolved after the sides agreed the portfolio would be held by premier Rami Hamdallah.

But several hours later, Hamdallah temporarily handed responsibility for the prisoners file to the ministry of agriculture, the official WAFA news agency said, without elaborating.

The new cabinet, which was pieced together by Fatah and Hamas, counts 17 ministers, all of them political independents. Technocratic in nature, it includes five ministers from Gaza, and will not have a political mandate.

Shortly after the ceremony, Gaza's Hamas prime minister Ismail Haniyeh and his cabinet resigned, a spokeswoman said.

"We're leaving the government, but not the nation. We're leaving the ministries but not the question of the nation," Haniyeh said in a televised speech, describing the cabinet as "a government of one people and one political system."

Abbas has pledged the new administration will abide by the principles laid down by the Middle East peace Quartet — to recognize Israel, reject violence and abide by all existing agreements.

Under the terms of a deal signed April 23, the Fatah-led Palestine Liberation Organization agreed to work with Hamas to establish an interim government of independents that would organize long-delayed elections.

The surprise agreement sought to end years of rivalry which saw the establishment of separate Palestinian administrations, with the West Bank ruled by the Fatah-dominated Palestinian Authority, and Gaza by Hamas.

In Israel, Prime Minister Benjamin Netanyahu convened his security cabinet for an emergency debate on how to respond, media said.

Israel has made no secret of its opposition to the unity agreement with Hamas, whose charter calls for the destruction of the Jewish state, and Netanyahu has warned the international community about rushing to recognize the new administration.

Economy Minister Naftali Bennett, head of the far-right Jewish Home, dismissed what he termed "a government of terrorists in suits," suggesting Israel implement his highly-publicized plan for annexing swathes of the occupied West Bank.

But Zehava Gal-On, head of the leftwing Meretz party, warned Netanyahu against rushing into "an automatic Pavlovian response which could harm Israel's existential interests."

"The reconciliation between Hamas and Fatah is positive and it will turn Abu Mazen (Abbas) into the president of all the Palestinians, on condition that the unity government abides by the Quartet principles," she said.

In a separate development just hours before the ceremony, rocket fire from Gaza and Syria struck Israel in two separate incidents that prompted the military to launch two air raids on the Strip, and to fire across the Syrian ceasefire line in the occupied Golan Heights.