A diplomatic source told AFP that Hamas' Doha office 'no longer serves its purpose'

Qatar has withdrawn as a key mediator for Gaza ceasefire talks, a diplomatic source told AFP, in the biggest setback to efforts to reach a truce since the war started over a year ago.

"The Qataris informed both the Israelis and Hamas that as long as there is a refusal to negotiate a deal in good faith, they cannot continue to mediate," the source said on condition of anonymity.

"As a consequence, the Hamas political office no longer serves its purpose."

Qatar, with the United Sates and Egypt, has been engaged in months of fruitless negotiations to secure a deal that would end the war in Gaza and release the Israeli captives held by Hamas.

The source said Qatar had already "notified both sides, Israel and Hamas as well as the US administration" of its decision.

"The Qataris conveyed to the US administration that they would be ready to re-engage in mediation when both sides...demonstrate a sincere willingness to return to the negotiating table," the source added.