The announcement was made by Palestinian president, Mahmoud Abbas and followed a much anticipated meeting between Mr Abbas who also heads the Fatah movement, Prime Minister Ismail Haniya from Hamas and the umbrella committee of Palestinian factions.
"We agreed the dialogue should start tomorrow on the basis of the prisoners initiative," Mr Abbas said.
He was referring to a controversial statehood initiative which implicitly recognises Israel and which Mr Abbas has vowed to put to a referendum if the factions fail to agree.
"The referendum is still possible, but our priority is an agreement,"
Mr Abbas said.
Mr Abbas' referendum announcement on Saturday set off the most dramatic spate of deadly battles between the rival Fatah and Hamas factions to date.
Other participants seemed optimisitic after the opening talks on Tuesday night.
"We will work to arrive to national agreement," said Khalil al Hiyya, head of the Hamas delegation. "Our true difference is with the occupation and not with each other."
"We agreed that the dialogue will succeed and we will work toward this goal," the Islamic Jihad's Khaled al Batish said. "It is very important that we arrive to an agreement."
The week of talks will begin with a one on one meeting between Mr Abbas and Mr Haniya during Wednesday.