Following a second meeting in Damascus on Tuesday, Fatah and Hamas failed to reach an agreement that would pave the way for reconciliation and the formation of a coalition government.
"We realize that reconciliation is a national Palestinian issue," Reuters quoted one Fatah official as having said.
The sticking point continues to be security-related issues. Hamas forces control the Gaza Strip while Fatah security forces, allied with the U.S.-backed Palestinian Authority, are deployed in parts of Judea and Samaria - the West Bank - under PA control.
"We have not reached a deal," senior Fatah official Assam al-Ahmad told reporters in Damascus, noting that the two factions also failed to reach a consensus on scheduling the next meeting.
The meeting was held at Hamas headquarters in Damascus, home to exiled Hamas chief Khaled Meshaal, among others.
Syrian President Bashar al-Assad, closely allied Hamas and Lebanese-based Hezbollah - both financed, armed and trained by Iran - has had his differences with PA President Mahmoud Abbas.
Meanwhile, after years of Egyptian-mediated negotiations, the two rival factions have failed to reconcile.
Hamas maintains that Fatah security forces have sold out to Israel and the U.S., effectively weakening Palestinian resistance and thereby prolonging the Zionist occupation.
In the latest round of talks in Damascus, Hamas called for the establishment of a committee to supervise all Palestinian security forces - in the West Bank and Gaza - to restructure and rebuild the whole security apparatus.
Fatah, under the leadership of President Mahmoud Abbas and Prime Minister Salam Fayyad, is unwilling to relinquish security control to Hamas.
Hamas defeated Fatah security forces in a violent military coup in June 2007 and took over control of the Gaza Strip.