Isolated in the region and facing a major economic crisis in Gaza, Hamas ceded power to gain breathing space and recuperate, and will remain in the background politically, analysts said.
The Islamist movement will instead work at the grass roots level to build up military, financial and social strength while, under the guise of a Palestinian unity deal, it takes refuge under the wing of the internationally-recognised Palestine Liberation Organisation.
Gaza's Hamas government stepped down on Monday after a new unity government took oath in Ramallah, the first fruits of a surprise April deal between the Islamist movement and the Western-backed PLO, which is dominated by the rival Fatah faction.
The resignation ends Hamas' seven-year tenure of political authority in the besieged Strip, an experience that ultimately weakened the movement.
"Hamas gave in, either from a genuine desire for reconciliation or from a lack of options, and it still needs time to repair the damage sustained from being in power," said Adnan Abu Amer, politics professor at Gaza's Ummah University.
"The move will restore Hamas' popularity, which has been eroded in Gaza. That's partly why it withdrew from the political scene -- to try and save face," he told AFP.
- Isolation, stagnation -
After Hamas won the Palestinian parliamentary elections by a landslide victory in 2006, it was immediately boycotted by the West.
Relations with president Mahmud Abbas' Fatah movement quickly deteriorated, leading to a major split 18 months later when Hamas seized control of Gaza and drove out Abbas' faction.
But successive wars with sworn enemy Israel, a crushing blockade and unprecedented pressure from neighbouring Egypt -- whose security forces have crushed Hamas ally the Muslim Brotherhood in the past year -- have isolated the movement and brought energy woes and economic stagnation to Gaza.
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Hamas was unable to pay more than half its 50,000 government employees after Egypt destroyed tunnels that were Gaza's lifeline, bringing in fuel and money.
Handing over power to a unity government of independents will allow Hamas to work in the background, away from the political limelight, while the PLO shoulders the responsibility of executive authority, experts say.
"This government, in my view, is an umbrella Hamas is hiding under in order to free itself of its financial problems, and from the retreat of political Islam in the region," said Abdel Majid Sweilam, of Al-Quds University in the West Bank.
Abu Amer agreed, saying Hamas was "keeping its eyes on the PLO, seeing the latter as the largest player in the Palestinian arena, and one that is internationally recognised."
- Grassroots revival? -
Hassan Abdo, a Gaza-based political analyst, said the Islamist movement -- blacklisted by the EU and US as a "terrorist organisation" -- would "have difficulty joining the regional and international system, but it will remain active and influential on the ground."
In practise, this means building up its military capabilities, improving its finances free from the burden of paying civil servants, and reviving its grassroots charity and social work.
But it is unclear if a revived Hamas would then cooperate with the PLO, or if differences between them in domestic and foreign policy would dominate Palestinian politics.
"The disagreements we saw in the moments before the government was announced suggest there could be obstacles to implementing executive power," said political analyst Jihad Harb, in reference to a brief dispute on Monday over the prisoners ministry.
And Hamas is "on its way to being the opposition within the Palestinian political system, as it renews its adherence to resistance" against Israel, said Walid al-Mudallal of Gaza's Islamic University.
Abbas has insisted the new government will follow his policy of recognising Israel, rejecting violence and abiding by past peace agreements.
But Hamas has said it remains committed to Israel's destruction, and it is still unclear how it would reconcile that stance with support for such a government.