Coalition talks between Palestinian President Mahmoud Abbas and the militant group Hamas have stalled over U.S. demands that a national unity government recognize Israel, Palestinian officials said Sunday.

The suspension of negotiations underscores the difficulty Abbas is having in trying to get Hamas to soften its anti-Israel ideology, a move that would pave the way to ending international sanctions crippling the Palestinian economy.

Israeli officials, meanwhile, said they were making progress in talks to win the release of an Israeli soldier captured three months ago by Hamas-linked militants in Gaza. That attack sparked an Israeli offensive in Gaza that further worsened the plight of Palestinians.

Abbas will use a meeting this week with President Bush on the sidelines of the U.N. General Assembly session in New York to try to win U.S. support for a coalition that does not fully meet international demands for a changed stance on Israel, Palestinian officials said.

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They said he would warn that failure to work out a unity government could lead to a Palestinian civil war.

Still, some Palestinians officials wondered whether Abbas and Hamas can bridge their differences.

"What's the point of forming a government if this government is saying that it won't recognize agreements signed with Israel?" Palestinian lawmaker Saeb Erekat, an Abbas confidant, told The Associated Press. "The whole point is to break the deadlock in the peace process and bring an end to the siege."

The so-called Quartet of Mideast peacemakers — the U.S., European Union, Russia and United Nations — insist Hamas must renounce violence, recognize Israel and accept past peace agreements before aid can resume.

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Hamas has long sought Israel's destruction, with its followers killing hundreds of Israelis in suicide bombings. But the group caved in to months of economic sanctions and announced last week that it would form a coalition government with Abbas' more moderate Fatah Party.

Syria's vice president told former Palestinian Prime Minister Ahmed Qureia on Sunday that Damascus supports the formation of a Palestinian national unity government, Syria's official news agency said. Syria hosts a number of Palestinian militant groups, including leaders of Hamas.

The Hamas Cabinet resigned Wednesday, and Abbas said the Palestinian Authority's 165,000 civil servants would be paid in the coming days. The employees have not been paid their full salaries since Hamas took control of the government in March after winning elections, leading Israel and international donors to cut off aid and other money to the new hard-line government.

But the current platform for the planned unity government falls short of the requirements set by the West to restore the flow of money, and Hamas leaders said they would not compromise any further.

Palestinian Prime Minister Ismail Haniyeh of Hamas said Sunday that the group would not recognize past peace deals despite the international pressure.

"If we were to always bend to the will of America, we would absolutely never have a state, an existence or honor," he told reporters, adding that talks with Abbas would resume when the president returned from New York.

The digging in by Hamas has infuriated Abbas, Palestinian officials said.

"America was not very happy, Europe was not so happy. Nobody was happy, but Abbas was doing his best to convince them," said Yasser Abed Rabbo, an Abbas aide. "Hamas has undermined his efforts."

On Saturday, U.S. Consul-General Jacob Walles told Abbas the new government would be unacceptable unless the international conditions were met, officials said.

"We expect any government to accept the Quartet principles," said Micaela Schweitzer-Bluhm, a spokeswoman at the consulate in Jerusalem.

At a meeting Wednesday, Abbas will try to convince Bush that the alternative to a Fatah-Hamas government is a Palestinian civil war and ask him to accept less than full compliance with the international demands to let Hamas sign on to a coalition, Palestinian officials said.

Although Hamas-Fatah talks will continue, Erekat and Abed Rabbo both questioned whether it would be possible to establish a joint government.

"I don't know if the deal is aborted. We will see in the near future," Abed Rabbo said.

Israeli security officials said they were making progress in efforts to secure the release of Cpl. Gilad Shalit, who was captured by militants affiliated with Hamas in a June 25 raid.

The comments were the first time Israeli officials confirmed movement toward a deal in which Shalit would be freed in return for the release of hundreds of Arab prisoners held by Israel. The Israelis had initially ruled out releasing any prisoners in exchange for Shalit.

As part of the negotiations, overseen by Egyptian mediators, Shalit's father received a letter from his son as a sign that he is alive, the security officials said, speaking on condition of anonymity because they were not authorized to talk about the negotiations.

The officials cautioned that Shalit's release could still take days, or weeks.

Palestinian officials also said there was progress in the talks, but said Israel had not answered demands for the release of hundreds of prisoners.