Palestinian President Mahmoud Abbas has sworn in a 24-member Cabinet dominated by the anti-Israeli Islamic militant group, Hamas.
Prime Minister Ismail Haniyeh of Hamas was the first to take the oath of office on Wednesday at the ceremony in the Gaza Strip. Mr. Haniyeh later pledged to support talks that Mr. Abbas undertakes to ease tensions in the region.
Fourteen of the 24 Cabinet members have served time in Israeli jails.
In Washington, President Bush said aid should go to suffering Palestinians but not to a government that has called for the destruction of Israel. The United States and Israel consider Hamas a terrorist group.
Meanwhile, Israel's Kadima Party began talks with possible coalition partners after declaring victory in Tuesday's parliamentary elections.
With 28 seats out of 120 in Israel's parliament, Kadima has won a plurality, but party officials say they are looking to Israel's Labor Party and to one of the smaller religious parties to assemble a broad coalition.
In his victory speech, Kadima's leader, Acting Prime Minister Ehud Olmert, said Israel will act alone to define its permanent borders if peace talks with a Hamas-led Palestinian government are not possible.