RAMALLAH, West Bank — The formation of a Palestinian unity government backed by rivals Hamas and Fatah will be announced Monday, Palestinian President Mahmoud Abbas said Saturday, adding that Israel warned him it would take punitive steps against the new alliance.

The formation of the government would be the most significant step yet toward ending a seven-year Palestinian political split. However, it is also bound to increase friction between Abbas and Israel’s hard-line government.

Abbas said he would respond to any Israeli punitive measures, such as withholding the monthly transfer of some $100 million in taxes and customs Israel collects on behalf of his Palestinian Authority. The funds are vital to keeping the self-rule government afloat.

The long-running Hamas-Fatah rivalry escalated in 2007, when the Islamic militant group Hamas seized the Gaza Strip from the internationally backed Abbas. Hamas, which has carried out scores of bombing, shooting and rocket attacks against Israeli targets, is considered a terrorist group by Israel and the West.

Save 75% on a Digital Subscription Today

After the April collapse of U.S.-mediated Israeli-Palestinian peace talks, the Palestinian rivals revived reconciliation efforts. Negotiators met repeatedly to agree on a government of technocrats backed by both sides that is to prepare for general elections in 2015. In recent days, there were last-minute disagreements, but Abbas’ announcement suggests the issues have been resolved.

“The announcement of the government will be on Monday,” he said during a meeting with several dozen pro-Palestinian activists from France. “The Israelis informed us today that they are going to boycott us immediately after we form the government.”

He added: “They are going to withhold our money,” referring to the monthly transfers. “This is our money, not aid from Israel, and we will not stay silent. They want to punish us because we have an agreement with Hamas, which is part of our people.”

Abbas, the leader of Fatah, reiterated that the unity government would follow his pragmatic program.

“We say (the government) is going to recognize Israel, denounce violence and recognize the international agreements,” he said, echoing the international community’s conditions for dealing with Hamas. “This is a technocrat government. It has nothing to do with Fatah, Hamas or any factions.”

A senior Israeli government official said the formation of a unity government “is a great leap backward,” but declined to say whether Israel would take punitive action. He spoke on condition of anonymity.