Prime Minister Rami Hamdallah was "ready to resign to support the formation of a national unity government and to take every effort to achieve genuine reconciliation", a statement read.
The government is the remnant of the cabinet of independent technocrats that the West Bank-based Fatah and Gaza rulers Hamas agreed on in 2014 when they announced their reconciliation.
But the unity government has been ineffective and essentially barred from operating in Gaza, with president Mahmud Abbas's Fatah and the Islamist Hamas long at loggerheads.
Tuesday's new declaration of a willingness to resign, coming after two days of talks between Fatah and Hamas in the Qatari capital Doha, was not the first time the government has proposed such a move.
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Hamas also said it was "ready to form a new unity government without preconditions", and called for "a new government to solve the current problems".
Hamas accuses Fatah of preventing the government from regulating the salaries of its 50,000 employees who have been on the books since the Islamists seized power in Gaza in 2007.
Fatah accuses Hamas of maintaining a rival government and refusing to cede the management of Gaza's borders.
Nickolay Mladenov, UN special coordinator for the Middle East peace process, on Tuesday welcomed the Doha meeting, saying the world body "supports all efforts undertaken to advance genuine Palestinian reconciliation on the basis of non-violence, democracy and PLO (Palestine Liberation Organisation) principles".
"The formation of a national unity government that abides by the PLO programme and the conduct of long-overdue elections are important elements of this process," he said in a statement.
The last Palestinian elections were held 10 years ago.