CAIRO - The rival Palestinian factions Fatah and Hamas took an important step Thursday toward reconciliation, announcing plans for the Islamic Hamas to join the umbrella group that has overseen two decades of on-and-off peace talks with Israel.

The deal to admit Hamas into the Fatah-dominated Palestine Liberation Organization could have deep repercussions. Hamas has opposed the talks and rejects Israel's right to exist. A strong Hamas voice in the group would further complicate the troubled Mideast diplomatic process.

Israeli officials reacted with alarm.

Hamas overran Gaza in 2007, and Palestinian President Mahmoud Abbas, who heads Fatah, has ruled only the West Bank since. The division has been an obstacle in peacemaking efforts with Israel, since Abbas does not speak for all the Palestinians.

A full reconciliation could solve that - or put Hamas in charge. The Islamist group won a parliamentary election in 2006, and a short-lived government that it formed with Fatah was shunned by Israel and the West, freezing peace efforts.

Under the deal, Hamas' supreme leader, Khaled Mashaal, joined a committee that will prepare for elections of the PLO's parliament in exile.

Any PLO election is likely years away because of logistics alone. The vote would have to include Palestinians spread throughout the world.

The sides also have tentatively agreed to hold separate elections next year in the West Bank and Gaza. That vote is meant to choose a single government for both territories, where Abbas hopes to establish an independent state.

Israel objects to any Palestinian government that includes Hamas, which is committed to Israel's destruction and has killed hundreds of Israelis. Israeli spokesman Mark Regev said that when Abbas "walks toward Hamas, he's walking away from peace."