"We will not recognise Israel, we will not recognise Israel, we will not recognise Israel," Mr Haniya thundered over the cheers of tens of thousands of supporters rallying in support of his embattled Palestinian government.
The prime minister instead repeated that his movement would be willing to enter into a truce with the Jewish state in exchange for a Palestinian state created on land occupied by Israel in the 1967 Middle East war.
"We are for the creation of a Palestinian state on the territories occupied in 1967 with Jerusalem as its capital in exchange for a truce but not recognition of Israel, which would amount to renouncing the land of our ancestors," he added.
Israel rejects any question of a truce and demands that the Palestinian government accept international conditions in order to resume dialogue and end a boycott that has sent the territories into economic freefall.
"It is ridiculous to contemplate a truce with someone who in the same sentence refuses to recognise your existence," said spokesman Avi Pazner.
After Hamas refused to recognise Israel, renounce violence and abide by past peace agreements, the West suspended direct aid when the group took office in March.
Diktats rejected
But in a speech summing up his government's record after six months, Mr Haniya rejected "diktats" imposed by the European Union, Russia, United Nations and United States, known as the so-called Middle East quartet.
"We reject foreign interference in the affairs of the Palestinian people and the diktats of the quartet," Haniya said.
"We insist on non-recognition of the legitimacy of occupation and we will never renounce an inch of our land, refugees' return and the creation of a Palestinian state enjoying full sovereignty with Jerusalem as its capital."
He slammed the "pressures" from Israel and its main ally the United States, accusing them of wanting a "made-to-measure Palestinian government" prepared to accede to "foreign diktats".
"We will be part of any unity government which endorses the national reconciliation document, which does not recognise the legitimacy of the occupation," Mr Haniya emphasised.
However Palestinian president Mahmud Abbas, a member of the moderate Fatah party which was defeated by Hamas in January elections, believes that the reconciliation document does entail implicit recognition of Israel and past peace agreements.
The mass show of Hamas strength comes at a time of utter stalemate in talks on forming a unity government and spiralling tensions which have spilled over into deadly clashes which have left 12 people dead since last Sunday.
"I call the Fatah leadership to attend an urgent meeting, even tonight, to put a stop to internal battles," Mr Haniya said, again appealing for a resumption of dialogue with Abbas.
Mr Haniya also heavily criticised the US administration, blaming Washington for the boycott of his government and denouncing "conspiracies" seeking to bring down his cabinet.
Although the West considers Hamas a terrorist organisation, Mr Haniya insisted his government had the legitimacy of being elected and could not be overthrown.
"I say to certain brothers and certain parties who are working day and night to bring down the government: do not tire yourself," he shouted.
The 43-year-old prime minister appeared briefly unwell at one point, turning pale and being helped away from the podium by bodyguards before managing to resume his speech within minutes as an aide fanned his back.