The move has been hailed as a "victory" by Hamas which holds sway in Gaza. The truce will end seven weeks of deadly conflict between Israel and Hamas. The conflict has so far claimed over 2,000 lives, most of them Palestinians.
The Palestinian official did not give the time for when a ceasefire would take effect.
The Islamist Hamas movement confirmed that a deal had been struck with Israel.
"The negotiations ended with an agreement which embodies the resistance of our people and a victory for the resistance," its exiled deputy leader Mussa Abu Marzuk wrote on his Facebook page.
The Palestinian official from Abbas' side said that the truce deal had been finalised after 48 hours of intensive shuttle diplomacy by Azzam al-Ahmed, head of the Palestinian delegation to the protracted, on-off truce talks.
"Over the past 48 hours, he has been shuttling between the leadership of Hamas, Islamic Jihad, all the factions, and Egyptian leaders, travelling between Ramallah, Gaza, Doha overseas," he said.
The agreement is expected to come into effect at 1600 GMT and it will bring an immediate halt to the violence in Gaza.
The conflict between the two sides started on July 8. The Palestinians said it was a "permanent" truce, while a senior Israeli official described it as "unconditional and unlimited in time."
Minutes after Hamas confirmed that a truce deal has been finalised several Palestinians flooded on to the streets of Gaza City. Mosques used their loudspeakers to broadcast celebratory chants of "God is greatest".
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