The announcement by Hamas leader Ismail Hanieh could undercut the legitimacy of the Jan. 9 election, though Hamas said it would honor the outcome. Hamas has tens of thousands of supporters and is particularly strong in the Gaza Strip.

"We are not calling on the Palestinian people to boycott the election, but Hamas members will follow the decision to boycott the election," Hanieh said.

Hanieh spoke as Egyptian and Israeli leaders met in Jerusalem to discuss Israel's planned withdrawal from Gaza next year. Israeli officials said the two sides agreed in principle to allow Egypt to deploy additional troops along its volatile border with Gaza to help ensure quiet after the pullout.

Since Arafat's death, the rival Palestinian factions have maintained a fragile calm, pledging to maintain unity during the current transitional period.

Hanieh said his group would boycott the election because it did not include legislative and municipal elections as well. The interim Palestinian leader, Mahmoud Abbas, is a frontrunner in the presidential race, but Hamas would likely make a strong showing in local races.

In the West Bank, Abbas played down Hamas' decision. "If they want to boycott these elections, it is up to them," he said.

Formally launching his campaign, Abbas called for a renewal of peace talks with Israel and said the two sides would meet after the election.

"We must have a dialogue with the Israelis," Abbas said at his campaign headquarters. "After the elections, we will meet again" to discuss the road map.

The internationally backed peace plan calls for the establishment of an independent state next year, but has been stalled since it was signed in June 2003.

The Palestinians have failed to meet their commitment to crack down on militant groups like Hamas, while Israel hasn't kept its pledge to halt settlement construction and pull down settlement outposts.

Abbas indicated that he is ready to take action against the militants. "Every nation has opposition groups, but there are also laws and institutions," he said. "I am committed to having one authority and only one army and political pluralism."

Hamas boycotted the first Palestinian general election in 1996 because it was a result of interim peace deals with Israel. Hamas opposes peace talks and is committed to Israel's destruction.

With the road map stalled, Israeli Prime Minister Ariel Sharon has pushed forward with his plan to pull out of the Gaza Strip and four small enclaves in the West Bank.