JERUSALEM (Reuters) - Israeli Prime Minister Ariel Sharon reached a deal with Shimon Peres on Thursday to name the opposition leader his senior deputy, clearing a key obstacle to a unity government able to abandon the occupied Gaza Strip.

Israeli troops killed five Palestinians on a raid into violence-plagued Gaza, where bloodshed has not ebbed despite new peace hopes after Yasser Arafat's death and expectations that moderate Mahmoud Abbas will win elections next month.

Most Israelis want to quit Gaza and right-winger Sharon has been negotiating with center-left Labour opponents on a unity government able to uproot settlers from the territory and a small chunk of the West Bank next year.

To end legal wrangling over titles, Sharon and Peres agreed that the Labour leader and Nobel peace laureate would be the most senior "deputy prime minister" in the new coalition.

Peres had originally wanted to be a "vice-premier," but that was constitutionally impossible unless Sharon sacked his current number two and Likud ally, Ehud Olmert.

"The green light has been given for putting together a government," said Michael Eitan, chairman of the parliamentary committee that would otherwise have needed to discuss changing the law.

Israeli commentators said a government could be named as early as Monday.

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7206833