CAIRO (AFP) - Rival Palestinian groups agreed on Thursday to work towards setting up a unity government after reconciliation talks aimed at ending long-running factional feuding. "It is indeed a historic day," former Palestinian Premier Ahmed Qorei said at a press conference announcing the creation of five main joint committees, including one tasked with forming a national unity government. Qorei, a member of the Fatah faction of Palestinian President Mahmud Abbas, said the committees, which will also cover issues such as security, national reconciliation, elections and reform of the umbrella group the Palestine Liberation Organisation, would complete their work by the end of March. "We have started a new chapter of reconciliation and unity." Earlier, officials from two smaller Palestinian factions said the groups involved in the Cairo-sponsored talks had agreed to form a unity government by the end of March but Qorei did not confirm this deadline. "The committees will end their work and a Palestinian unity government will be formed by the end of March," Jamil al-Majdalawi, an official with the leftist Popular Front for the Liberation of Palestine, told AFP. His comments were confirmed by Mohammed al-Hindi, deputy leader of the Palestinian Islamic Jihad. The factions also agreed to release prisoners held by Hamas and Fatah and to end a war of words being played out in the media, Qorei said. The stakes are high as billions of dollars of funds to rebuild the Gaza Strip after Israel's war on the territory may be available if terms set by international donors can be met before an aid meeting next week in Egypt. Thursday's conference, which brought in other Palestinian factions, stemmed from Egyptian proposals for a lasting ceasefire following Israel's onslaught on Gaza from December 27 to January 18. Meanwhile, Israeli airstrikes hit smuggling tunnels between Hamas-run Gaza and Egypt on Thursday after the fighters in the enclave fired two rockets into the Jewish state, the army and witnesses said. The afternoon strikes did not result in any casualties, witnesses said. Meanwhile, US President Barack Obama's Middle East envoy George Mitchell discussed the situation in Gaza with senior Israeli officials on Thursday on his second regional trip to try to advance stalled peace talks. "We are going to discuss before the gathering of the donor states in Egypt the situation in Gaza," outgoing Foreign Minister Tzipi Livni told reporters before the talks with Mitchell at a Tel Aviv hotel. "Israel believes that there is a need to help... humanitarian needs and to find a way to do so without strengthening Hamas," she said. Mitchell said only that he was looking forward to the talks. He later met Benjamin Netanyahu, the hawk charged with forming Israel's new government, but neither said anything at the start or end of the encounter. Mitchell was due to meet outgoing PM Ehud Olmert later in the day for closed-door talks. On Friday, he was due to hold talks with Israeli Defence Minister Ehud Barak before heading to the occupied West Bank for meetings with Palestinian president Mahmud Abbas and prime minister Salam Fayyad. According to the Israeli press, Mitchell, one of the architects of accords that brought peace to Northern Ireland, plans to rent offices in Jerusalem with a view to visiting the region every month.