Hamas missed chance to end siege: Solana

"I can say that (Hamas) had an offer by the president (Mahmud Abbas) and I think it was a very generous offer," Solana told reporters after meeting with Abbas.

Solana's declaration came after Abbas said on Friday that talks to form a national unity government involving Hamas and Abbas's moderate Fatah were at a dead end.

"It is an offer that would have resolved many of the problems facing the Palestinian people and unfortunately that offer has not been accepted," Solana continued.

The EU has joined the United States and Israel in enforcing a crippling aid freeze on the Palestinian Authority since Hamas took power in March.

Meanwhile, Hamas yesterday rejected demands by PLO leaders that its government resign over the failure to form a moderate coalition acceptable to the West a sign of an intensifying power struggle between Islamic militants and moderate President Mahmoud Abbas.

The crisis was accompanied by angry exchanges between Hamas and leaders of Abbas' Fatah Party.

Hamas accused Fatah, which controls the Palestine Liberation Organisation and was defeated in parliament elections a year ago, of trying to overthrow the government. A leading Fatah official called for early elections to resolve the standoff.

The showdown began Thursday when Abbas announced the failure of months of negotiations with Hamas over setting up a moderate government that could win international recognition and help end a foreign aid boycott. Talks deadlocked over the distribution of key portfolios and the government's platform, with Hamas rejecting international demands that it renounce violence and recognize Israel.