"This government needs to renounce terror and violence," Hadley told CNN television Sunday. "It needs to acknowledge the right of Israel to exist," he said.
Hadley, a senior White House official, said those conditions so far have not been met.
"That is why we will not deal with this government," he said.
"We will not deal with this government until it accepts those principles," he added. "We'll be watching obviously for the words and deeds of this government."
On Saturday, the United States said it was disturbed by the new Palestinian government's claim of a right to resist Israel and disappointed with a speech on Saturday by Prime Minister Ismail Haniyeh expressing that right.
"The national unity government's platform reference to the right of resistance is disturbing and contradicts the Quartet principles of renunciation of violence," US State Department spokeswoman Nancy Beck said.
The European Union was cautious in its responses to the formation of the new government Saturday. An announcement released by Germany, current President of the Council of the European Union, said that renewal of Europe's direct aid to the PA would depend on an assessment of the new cabinet's platform and actions.
Israel was working diligently throughout the weekend in an effort to ensure that the sanctions on the PA cabinet remain intact until the unity government decides to accept the demands of the Quartet: Recognize Israel, renounce violence, and honor prior agreements.
Foreign Minister Tzipi Livni spoke to several of her European counterparts Saturday. She emphasized Israel's standpoint whereby the unity government was regarded as one entity and Israel would not differentiate between Hamas and Fatah members.
"Money meant for Fatah would no doubt end up in the hands of Hamas ," she said.
Olmert calls on world to shun PA gov't
Earlier Sunday, the Israeli cabinet approved a boycott of the new Palestinian unity government by a vote of 19 to zero.
Prime Minister Ehud Olmert urged the international community to join Israel in shunning the new Palestinian unity government, calling its platform "very problematic."
"We will not be able to pursue contacts with the government or its members," Olmert told the cabinet. "We expect that the international community will not be misled by the creation of the coalition government."
Foreign Minister Tzipi Livni said during the cabinet meeting that Palestinian President Mahmoud Abbas' decision to join Hamas in a unity government made it difficult for Israel to maintain contacts with him.
“Not only did he join the unity government with Hamas, which does not adhere to the international community’s demands, but he has also agreed to bring any diplomatic agreement for the approval of the Palestinian National Council, which will include Hamas representatives, or put it to a referendum that will include Palestinians living abroad and in refugee camps,” she said.
Vice Premier Shimon Peres said the Palestinians should forgo their demands for the right of return for Palestinian refugees.
“Right of return means only one thing - turning Israel into a Palestinian state,” he said. “Israel still backs the concept of two states for two peoples, while Hamas is interested in one Palestinian state in the region.”
Ronny Sofer and Reuters contributed to the report