Palestinian President Mahmoud Abbas has called for presidential and parliamentary elections to be held at the 'earliest opportunity'.
A new poll was the only way to resolve the current crisis, Mr Abbas said.
He was speaking live on Palestinian TV after days of escalating tensions between Hamas and his Fatah movement that have raised fears of civil war.
Hamas, which was elected in January and does not recognise Israel,immediately rejected the call.
' I decided ...to call for early presidential and parliament elections,' Mr Abbas said at the end of a major policy speech in Ramallah.
Mr Abbas, who does not have the direct power to call elections, said he had asked the Central Election Committee to begin preparing as soon as possible for this.
In the interim period all efforts should be made to form a unity government made up of technocrats, he said.
There have been several bouts of street fighting since Hamas won a sweeping victory in parliamentary elections last January.
Hamas and the Fatah faction led by Mr Abbas have been unable to reach agreement on a national reconciliation government.
'Without a political agreement, security will remain disturbed,' Mr Abbas said in his speech in Ramallah.
He pointed out that he had the right to fire the Hamas government which he blamed for the current crisis.
Hamas had refused to meet international demands to recognise Israel and renounce violence, which had led to Western sanctions, Mr Abbas said.
He said he had urged foreign governments, after appointing the Hamas-led government following the party's election success, to give the new cabinet a chance, but unfortunately a siege had instead been imposed on the Palestinians.
This had reduced the income of Palestinians by 51%, he said, with salaries unpaid for eight months.
He also denied there had been a conspiracy to kill Prime Minister Ismail Haniya of Hamas this week.
Before the speech it was widely thought, though, that Mr Abbas would be very unlikely to go so far as naming a date for early polls.
He knows that Hamas will bitterly oppose new elections, seeing it as a Fatah faction manoeuvre designed to reverse the mandate it won in January's vote.
Hamas boycotted Mr Abbas's speech to the Palestinian parliament, in protest at 'dangerous and bloody' recent events.
Bad relations
Egyptian diplomats based in Gaza are trying to mediate between the two sides.
They have stepped in a number of times before to calm the situation provoked by the chronically bad relations between Hamas, the largest faction, and Fatah.
But the diplomats' task may be tougher than ever, amid a sense that the current tensions are on a higher plane than seen previously, our correspondent Alan Johnston says.
Speaking from Damascus, Hamas's exiled leader Khaled Mashaal called for restraint to 'protect Palestinian blood' and 'Palestinian unity'.
In an interview broadcast by Hamas radio in Gaza City, Mr Mashaal said: 'Our fight is against the [Israeli] occupation and we will not let ourselves be drawn into a civil war.'
The past week has been marked by attacks, counter-attacks and mutual accusations.
Hamas blamed Fatah for a shooting that targeted PM Ismail Haniya on Thursday.
Mr Haniya's car was attacked by gunmen while crossing into Gaza from Egypt, and one of his bodyguards died in the incident.
A Hamas spokesman blamed a senior Fatah official, former security chief Mohammad Dahlan, for the attack - an accusation he rejected.
The shoot-out at the Rafah border crossing led to more clashes on Friday, both in the West Bank and in Gaza City.
Some 32 people were injured when Palestinian police loyal to Fatah fought Hamas supporters in the West Bank town of Ramallah.