— Palestinians overcame last-minute squabbles to form a new “government of national unity” Monday, backed by the Islamist militant group Hamas, which the United States and Israel have branded a terrorist organization.

The announcement of the transitional government, led by the moderate Palestinian Authority Prime Minister Rami Hamdallah and with ministries run mostly by technocrats, represents a significant step toward ending a seven-year feud between the Palestinian political factions that separately control the West Bank and the Gaza Strip .

It also appears to skirt, barely, U.S. prohibitions on aid to a Palestinian government that has “undue” Hamas presence or influence. The Obama administration had worked behind the scenes to suggest terms for the new coalition government that would not trigger the U.S. ban, reasoning that the money helps preserve American leverage.

The reconciliation pact throws together two antagonistic camps with opposing visions: Hamas, the resistance movement that controls the Gaza Strip and does not recognize Israel, and the Palestine Liberation Organization and its political party, Fatah, which just concluded nine months of ultimately fruitless peace negotiations with Israel.

Mahmoud Abbas, the Palestinian Authority president and PLO leader, promised that the new government would continue a course of nonviolence. He said any peace talks with the Israelis would take place under the auspices of the PLO — not the interim government.

“Today we declare the end of the split and regaining the unity of the homeland,” Abbas said in a recorded speech on Palestine TV. “This black page in our history has been closed forever.”

Left undecided for now is whether Hamas and its military wing will allow the new government to run the security forces in the Gaza Strip and whether Hamas would be allowed to operate more freely in the West Bank — permitted, for example, to stage mass rallies or run social programs, which the group is now banned from doing.

The naming of the new reconciliation government almost fell apart Monday morning because Hamas officials balked at a decision by Abbas to dismantle the Ministry of Prisoner Affairs and put it under the PLO mantle. As a compromise, the two factions agreed that the ministry would continue to function but be overseen by the prime minister.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu vowed that he would not conduct diplomatic negotiations with a government “backed by Hamas, a terrorist organization that calls for the destruction of Israel.”

Expressing widespread sentiment on the Israeli right, Finance Minister Naftali Bennett called the makeup of the new Palestinian government “terrorists in suits.”

Israel’s security cabinet voted unanimously to authorize economic sanctions against the Palestinian Authority and hold it responsible for attacks that originate from the Gaza Strip, a frequent launchpad for rocket attacks against Israel.

Outside of Israel, reactions to the unity government were mixed. Arab countries have been pushing the two Palestinian factions to reconcile their differences and face Israel together. Russia and Europe have expressed cautious support for the new effort.

The Obama administration has chosen a wait-and-see approach.

“At this point, it appears that President Abbas has formed an interim technocratic government that does not include ministers affiliated with Hamas,” State Department spokeswoman Jen Psaki said. “Moving forward, we will be judging this government by its actions. Based on what we know now, we intend to work with this government, but we’ll be watching closely to ensure that it upholds the principles that President Abbas reiterated today.”

Secretary of State John F. Kerry spoke Sunday with Abbas. The State Department said afterward that Kerry “expressed concern about Hamas’s role in any such government and the importance that the new government commit to the principles of nonviolence, recognition of the state of Israel and acceptance of previous agreements with it.”

Abbas assured Kerry that the new government would adhere to those principles, Psaki said.

Kobi Michael, former deputy director general of Israel’s Ministry of Strategic Affairs, expressed doubt Monday that the unity government would last, citing the different agendas and personalities of Hamas and Fatah.

But Michael also said that regardless of Israel’s insistence that it would not recognize the new government, its security forces will still collaborate with Palestinian police in the West Bank — if only to keep an eye on Hamas.

Israel withdrew in April from U.S.-brokered peace talks with the Palestinians after Hamas and Abbas announced their intent to form a unity government and then hold presidential and parliamentary elections within six months. At the time, President Obama called the reconciliation announcement “unhelpful.”

In Washington, Republican Sens. Mark Kirk (Ill.) and Marco Rubio (Fla.) called for a suspension and review of U.S. aid, saying the Palestinian announcement shows that Israel “does not have a viable partner for peace.”

The unity government is an “end run” around U.S. restrictions, they said.

But Rep. Brad Sherman (D-Calif.) was more cautious, saying that although the Palestinian agreement appears tailored to meet the letter of the U.S. law setting out terms for aid, Congress might attach further conditions for some assistance.

The Palestinians last held elections in January 2006, and Abbas has served for years without a full electoral mandate.

Hamas won the 2006 parliamentary elections and, after a violent confrontation, threw Fatah leaders out of the Gaza Strip in 2007. The Palestinian people and government have been divided by geography and politics for seven years.

Gearan reported from Washington.