(Adds Israeli comment, changes dateline from GAZA)

By Dan Williams

JERUSALEM, May 1 (Reuters) - Israel would likely agree to an informal truce with Palestinian militants in the Gaza Strip if cross-border rocket attacks and arms smuggling into the territory ended, a senior Israeli official said on Thursday.

Citing an unnamed high-level Egyptian official, Egypt's state news agency MENA said on Wednesday that Palestinian factions meeting in Cairo had agreed to an Egyptian proposal for a ceasefire starting in the Hamas-controlled Gaza Strip.

But a number of factions were equivocal in their support for a truce, and some said they reserved the right to retaliate against Israeli attacks.

A member of Israel's security cabinet, who asked not be identified because a truce proposal had not been finalised, said Israel was waiting to see the results of Egyptian mediation.

"There will not be a signed agreement between Israel and Hamas, obviously," the official said. "But there is nothing to stop each side from independently making an undertaking with the Egyptians. That, in effect, would be a tacit truce deal."

Israel, he said "will almost certainly go along" with a ceasefire if it "falls in line with our basic demands -- an end to the violence from Gaza and the arms smuggling fuelling that violence".

The official said his views appeared to be shared by key decision-makers in Prime Minister Ehud Olmert's government and that he expected "a breakthrough on this matter within days". Some other Israeli officials, including among the military top brass, have voiced opposition to a truce that could allow Hamas and fellow factions to recover from recent fighting.

Islamic Jihad, which frequently launches rockets at Israel, said it could not formally accept a truce agreement that did not also apply at the onset to the occupied West Bank.

"But we will not be the first to violate or undermine it, and we will give a chance for the reopening of (the Gaza Strip's border) crossings and alleviating the suffering of our people," Zeyad al-Nakhala, deputy to exiled Islam

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