Rival Palestinian political factions Fatah and Hamas have reached agreement on a common political strategy to try to end a damaging power struggle.
Hamas says all of Israel is built on occupied Palestinian land
However, Hamas negotiators have denied earlier reports that the deal meant the militants would implicitly recognise Israel - a major policy shift.
The full text of the accord has not yet been released. A Hamas minister said it did not have "one word" on the issue.
The deal comes amid heightened tension over the capture of an Israeli soldier.
Israeli tanks and troops have massed on the border and Israeli Prime Minister Ehud Olmert has warned that a large scale military operation is rapidly approaching.
Palestinian minister Abdel Rahman Zeidan told the BBC the Hamas-Fatah document did not in any way recognise the state of Israel.
DOCUMENT KEY QUOTES
"[Palestinians aim] to establish an independent state with holy Jerusalem as its capital on all the territories occupied in 1967"
"[Signatories commit to] resistance through various means, and confining resistance in the territories occupied in 1967, in addition to political, negotiating and diplomatic action"
"There is no agreement between the Palestinians on specifically this phrase. You will not find one word in the document clearly stating the recognition of Israel as a state. Nobody has agreed to this. This was not on the table. This was not in the dialogue," he said.
However, a Hamas member who helped negotiate the agreement, Ziyad Dayeh, said Hamas support for a two-state solution was nothing new for Hamas.
"When talking about a Palestinian state in the occupied territories of 1967, it means there would be another state on the other part of Palestine. It means, yes, practically, a two-state solution, and it's not a new thing - it has been offered by Sheikh Ahmed Yassin before," he said.
'No room for Jewish state'
The BBC's James Reynolds in Gaza says that the central point of the joint manifesto is the creation of a Palestinian state on the West Bank and the Gaza Strip.
Traditionally that is one half of a two-state solution, but the existing drafts of the deal make no mention of the second half of this solution - the state of Israel.
This omission is deliberate, our correspondent says.
While some have argued that this means Hamas tacitly accepts Israel's right to exist, it is becoming clear that that is not how Hamas sees it.
Hamas' Ismail Haniya has yet to reveal details of the deal
Hamas negotiators have told the BBC that the entire state of Israel has been built on occupied Palestinian land.
They believe that a Palestinian state on the West Bank and Gaza is a first step - not a final step.
They believe that future generations of Palestinians will reclaim all their historic homeland. And that, in the end, there will be no room for what is now the Jewish state of Israel, our correspondent says.
Mr Zeidan did say, however, that the Palestinian factions had agreed that the Palestinian state would be established inside the 1967 borders - and to delegate Palestinian Authority President Mahmoud Abbas "to negotiate with Israel on an agreement, a peace agreement".
'Out of reach'
News of the Hamas-Fatah manifesto came as a standoff over the abduction of Cpl Gilad Shalit, who was seized by Palestinian militants in a clash on the Gaza border on Sunday, continued.
Palestinian militants acknowledged for the first time on Tuesday that Israeli tank gunner Gilad Shalit was alive.
"The soldier is in a secure place that the Zionists cannot reach," said Mohammed Abdel Al, a spokesman for the Popular Resistance Committees, one of three Palestinian groups involved in Sunday's abduction.
According to Israeli media reports officials believe he was injured in the stomach and hand during the attack near Kerem Shalom.
On Monday three Palestinian militant groups demanded the release of Palestinian women and youths being held in Israeli jails in return for news of the captured soldier.
Ramallah resident Walid al-Houdaly, whose wife and 18-month-old child are in an Israeli jail, told the BBC News website that he backed those calls:
Israel says time is running out before it moves to free Shalit
"There is one soldier, but there have been hundreds of Palestinians kidnapped from their houses," he said.
Speaking to the BBC on Tuesday, Israeli foreign ministry spokesman Mark Regev said that the release of Cpl Shalit must be immediate and unconditional.
"The state of Israel does not negotiate with terrorists," Mr Regev insisted. "Unless he is released it is our moral obligation as a government to take action to free him."
Intense diplomatic efforts have been under way since the soldier's disappearance, including mediation by an Egyptian delegation in the Gaza Strip.
The Israeli leader must choose between going ahead with military action that would endanger the life of the captured soldier or risk being seen as weak, says the BBC's Jon Leyne in Jerusalem.
And the Hamas-led Palestinian government must decide whether they are really willing to go into a full-scale confrontation with the Israelis which could have disastrous consequences.