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Palestinian President Mahmoud Abbas must abandon Fatah's pact with Hamas if he wants peace, Israel's Prime Minister Benjamin Netanyahu has told the BBC.

Israel earlier suspended peace talks with the Palestinians in response to a unity deal between the two factions.

The US has voiced its "disapproval", but is not ready to declare the talks over and is "still making the effort."

Fatah and Hamas agreed on Wednesday to form a unity government within weeks and hold elections six months later.

They have been at odds since Hamas, which won parliamentary elections in 2006, ousted forces loyal to Mr Abbas and Fatah in the Gaza Strip during clashes in 2007 and set up a rival government.

Mr Netanyahu told the BBC's Middle East Editor Jeremy Bowen that Mr Abbas, the president of the Palestinian Authority and leader of Fatah, could "have peace with Israel or a pact with Hamas - he can't have both."

He said Israel would only resume peace talks with Palestinians "when they decide to abandon the course of terror."

"As long as I'm prime minister of Israel, I will never negotiate with a Palestinian government that is backed by Hamas terrorists that are calling for our liquidation," he added.

The chief Palestinian peace negotiator, Saeb Erekat, insisted that Palestinian reconciliation was an internal matter.

"Israel had no right to interfere in this issue," he told the Associated Press.