Hamas says Ismail Haniyeh chosen as its leader

Despite Haniyeh's reputation as an affable leader who helped push Hamas to compete in elections that were expected to moderate the organization, the years of conflict with Israel and estrangement from Fatah have hardened the newly elected political leader and made him more inclined to go along with the military wing, said one analyst.

Hamas is trying to rebrand itself as an Islamic national liberation movement, rather than a branch of the pan-Arab Muslim Brotherhood, which has been outlawed by Egypt.

Mr Haniya, 54, lives in Gaza, which Hamas has ruled since 2007, unlike Mr Meshaal, who lives in Qatar.

Hamas is listed as a terrorist organisation by the United States and European Union.

Former Hamas leader in the Gaza Strip Ismail Haniya (C) waving to the crowd during a rally in Gaza City following a deal hailed by Israel and the Islamist movement as "victory" in the 50-day war.

The announcement caps several months of voting among Hamas' far-flung members in Gaza, the West Bank, Israeli jails and overseas to select a replacement for Meshaal, who sought to step down. The Rafah crossing is Gaza's only gateway to the outside world not controlled by Israel but it has remained largely closed in recent years because of tensions between Egypt and Gaza's Islamist rulers Hamas.

Always dressed impeccably in Western-style suits and a sharp orator, Haniya has exemplified Hamas's internal struggle between the traditional and the modern, between resistance against Israeli occupation and mainstream politics. He was the private secretary of Hamas' founder and spiritual leader Ahmed Yassin.

Before Saturday's announcement, Palestinian media speculated over a number of possible candidates to replace Mashaal, including deputy politburo chief Mousa Abu Marzouk and politburo member Imad al-Alami.

Haniyeh's first task will be to cope with escalating tensions between Hamas and Fatah.

In Gaza, where Haniyeh still resides in his home in a refugee camp, some residents saw his election as a sign that could draw attention to the territory's woes.

Israel had no immediate comment.