DAMASCUS, Jan 10: Hamas acknowledges the existence of Israel as a reality but formal recognition will only be considered when a Palestinian state has been created, the movement's exiled leader Khaled Meshaal said on Wednesday.

Softening a previous refusal to accept the Jewish state's existence, Mr Meshaal said Israel was a matter of fact and a reality that will persist.

There will remain a state called Israel, Mr Meshaal said in an interview in the Syrian capital, in what appeared to be clearest statement yet by the Islamist group on its attitude toward the state it previously said had no right to exist.

The problem is not that there is an entity called Israel, said Mr Meshaal, who survived an Israeli assassination attempt in 1997. The problem is that the Palestinian state is non-existent.

Israel and Western governments have put financial sanctions on the Hamas-led Palestinian government for refusing to recognise Israel, renounce violence and accept past peace accords.

The embargo has hit the Palestinian economy hard.

Mr Meshaal said Hamas would defy the Western conditions, which he described as blackmail, and would refuse to consider formal recognition of Israel until a viable Palestinian state was established.

Changing the Hamas charter, which calls for the destruction of Israel, was also a matter for the future, he said.

The distant future will have its own circumstances and positions could be determined then, he said in a wide-ranging interview.

Past concessions to Israel by Palestinian negotiators went unrewarded, he argued, and his Islamist group would drive hard bargains over key issues such as recognition.

For Israel to suck us into bargains in stages and in packages - this road constitutes an attempt to weaken the Palestinian position.

BORDERS: Asked about Mr Meshaal's comments Israeli foreign ministry spokesman Mark Regev responded that Hamas had said in the past it wanted to wipe Israel from the map and there was no indication it had changed its position.