Announcing his intention on Monday, he said that he was not closing the door on power-sharing talks with Hamas, which effectively governs the Gaza Strip.
Abbas promised to disband the planned government once Fatah reached a reconciliation agreement with Hamas.
Nour Odeh, Al Jazeera’s correspondent in Ramallah, in the West Bank, said that the government would be made up of a number of different factions.
“But, of course, Hamas will not be party to this government as that reconciliation is yet to happen,” she reported.
Reconciliation talks between the two parties have reached deadlock over Fatah’s insistence that Hamas recognise Israel, renounce violence and accept existing agreements between Israel and the Palestinians.
Abbas’s move puts pressure on Hamas ahead of the next round of talks, scheduled for Saturday.
“The pressure game is being played by both sides – in the Gaza Strip Hamas has appointed a new interior minister [Fathi Hammad], it’s taken different measures to consolidate its grip on the Gaza Strip,” Odeh said.
Fawzi Barhoum, a Hamas official, said that Abbas’s move had “issued a death certificate ahead of talks”.
“This step is not a good sign … It will deepen divisions,” he said.
Since Hamas pushed security forces loyal to Abbas out of Gaza two years ago, his Western-backed administration has controlled only the West Bank.
According to Palestinian officials, Abbas will ask Salam Fayyad, the current Palestinian prime minister, to form the new government.
Fayyad, a US-educated economist, had said that he was quitting the role, but announced on April 1 that he would remain in office until the end of the talks between Hamas and Fatah.
Abbas also announced that his Fatah movement would hold a long-overdue conference on July 1 to select new leaders.
The last conference was held in 1989, and Fatah’s popularity has declined steadily since then, in part because of the movement’s failure to renew itself.
Internal reforms could help Fatah compete against Hamas in general elections due to be held by next year.