Palestinian militant groups and Israel agreed to end a weeks-long escalation of unrest along the Israel-Gaza border, Gaza's ruling Islamist group Hamas and Israel said on Monday.

Under the deal, brokered by a Qatari envoy, Hamas would end the launching of incendiary balloons, and Israel would end air strikes, said a Palestinian official close to the mediation.

COGAT, Israel's liaison agency to the Palestinian territories, confirmed that after security consultations led by Defense Minister Benny Gantz, Gaza's main goods crossing would reopen and fishermen would be allowed back to work, up to 15 nautical miles.

A COGAT statement said the decisions were "subject to the continuation of the calm and the security stability" but warned that if Hamas failed to deliver, Israel would "act accordingly."

After talks with Qatari envoy Mohammed el-Emadi, "an understanding was reached to rein in the latest escalation and end (Israeli) aggression against our people," said the office of the Palestinian group's Gaza leader Yahya Sinwar.

The delegation was also joined by U.S. Senior Adviser Jared Kushner and National Security Advisor Robert O'Brien, and Israeli Prime Minister Benjamin Netanyahu to finalize a pact marking open relations between the Gulf nation and Israel.

In the latest escalation, Israel has bombed Gaza almost daily since August 6, in response to airborne incendiary devices and, less frequently, rockets launched across the border.

The fire bombs – crude devices fitted to balloons, inflated condoms or plastic bags – have triggered more than 400 blazes and damaged swathes of farmland in southern Israel, according to the fire brigade. The fire balloons launched in recent weeks were widely seen as an attempt by Hamas to improve the terms of the informal deal.

An Egyptian delegation had been shuttling between the two sides to try to broker a renewal of an informal truce under which Israel committed to ease its 13-year-old blockade of Gaza in return for calm on the border.

A Hamas source told AFP there had been "a total halt" to balloon and other attacks against Israel, in agreement with other factions in the coastal strip, home to some two million people.

"Fuel supplies will return and the power station will be restarted from Tuesday," the source said.

A punitive Israeli-imposed ban on fuel deliveries cut electricity to just four hours a day, supplied from the Israeli grid.

Crossing to reopen

COGAT announced in a statement that after "efforts to calm the situation," it would "resume the routine activity of the Kerem Shalom Crossing, including the entry of fuel products," starting Tuesday.

"In addition, the fishing zone of the Gaza Strip will be expanded to 15 nautical miles," it said.

But, COGAT warned: "If Hamas, which is accountable for all actions that are taken in the Gaza Strip, fails to stand its obligations, Israel will act accordingly."

Monday's announcement came amid a flurry diplomatic activity from gas-rich Qatar whose envoy delivered the latest tranche of 30 million U.S. dollars in aid Gaza before holding talks with Israeli officials in Tel Aviv.

Israeli officials told Channel 12 TV news that Hamas has received the money from Qatar, in exchange to halt the launches of explosive balloons towards southern Israel.

Hamas also said that the Qatari aid tranche will allow a start on the construction of a new power line, and would be expanded to 35 million U.S. dollars, with the difference used to cover public servants' salaries.

Financial aid from Qatar has been a major component of a truce first agreed more than a year ago and renewed several times since.

Sources close to Hamas had said it also wanted other measures to ease living conditions in the territory, including the extension of an industrial zone in the east and an increase in the number of Israeli work permits issued to Gazans once anti-coronavirus restrictions have been lifted.

But disagreements over implementation have fuelled repeated flare-ups with the Islamist group, which has seized power in Gaza from rival Palestinian forces since 2007. Israel and Egypt imposed since then, attributing containing Hamas's arsenal, but critics view it as a form of collective punishment.

Israel and Hamas have fought three wars and several smaller battles since the closure was imposed, and mediators have been working to prevent a new war.

(With input from agencies)