Palestinian factions signed a reconciliation deal in Algiers on Thursday, vowing to hold elections by next October in their latest attempt to end a rift that has now lasted more than 15 years.

The deal was signed by a leading figure from the Fatah party of President Mahmud Abbas and by the chief of Islamist movement Hamas, which rules Gaza.

But Abbas himself, president of the Palestinian Authority since 2005, was not present.

"We signed this agreement to get rid of the malignant cancer of division that has entered the Palestinian body," said the head of the Fatah delegation, Azzam al-Ahmed.

"We are optimistic that it will be implemented and will not remain ink on paper."

Hamas chief Ismail Haniyeh said it was "a day of joy in Palestine and Algeria and for those who love the Palestinian cause, but a day of sadness for the Zionist entity (Israel)".

Fatah and Hamas have been at odds since elections in 2006, which were won by Hamas but never recognised by the international community.

The following year, the Islamist movement seized control of the Gaza Strip beginning years of division, with Fatah administering Palestinian-run areas of the Israeli-occupied West Bank.

The first elections since the division had been set to take place last year, but were cancelled by Abbas.

Algerian President Abdelaziz Tebboune, who mediated Thursday's deal, noted in a speech at the signing ceremony in the Algerian capital's Palace of Nations that Yasser Arafat had used the same building to announce the independence of the State of Palestine in 1988.

The deal was signed with pomp and ceremony in the presence of foreign ambassadors and a military band that played the Palestinian and Algerian national anthems.

Fatah and Hamas have signed several similar deals in the past but none has led to elections actually taking place.

Yet Thursday's agreement is something of a diplomatic coup for Algeria, weeks before it is set to host an Arab League summit.

A major gas exporter, the North African country has received a steady stream of European leaders in recent months as it seeks to increase both energy sales and its diplomatic clout, particularly amid renewed tensions with its main rival Morocco.

Under Thursday's "Algiers Declaration", also signed by other major Palestinian factions, elections will take place for the presidency and for the Palestinian Legislative Council, which acts as a parliament for Palestinians in the occupied territories.

It also stipulates elections for the Palestinian National Council, a parliament for Palestinians including in the millions-strong diaspora. Algeria agreed to host the Council.

There had been discussion of forming a unity government but it was not mentioned in the final document.