Third appeal
Palacios was given parole in December after serving almost four years of a 25-year prison sentence for his opposition activities.
Speaking at the meeting convened at his Havana home on Wednesday, he said: "Opposition numbers have multiplied, despite the difficult conditions in Cuba.
"We do not have to wait for Fidel Castro to die to grow. We are growing every day."
It was the third call to unity in recent months by pro-democracy groups, which are still recovering from a crackdown that landed 75 of their more active members in prison in 2003.
Last week, Oswaldo Paya, Cuba's best-known dissident and head of the Christian Liberation Movement, called on the National Assembly to allow open elections and guarantee freedom of expression.
Manuel Cuesta Morua, a social democrat who has made two pleas for unity since April, said Cuban dissidents sensed the time has come to organise.
Raul reforms
Castro, 81, has not appeared in public for more than a year since life-threatening intestinal surgery forced him to hand over the reins of government to his brother Raul Castro for the first time since he seized power in 1959.
Even though a score of jailed dissidents have been freed since then, Palacios said Raul had not increased political freedom and real power still lay with Fidel Castro.
However, Mark Falcoff, from the American Enterprise Institute, a conservative think-tank, told Al Jazeera: "It's wrong to underestimate Raul Castro. For the last few years he has been putting his people in all the top ministries."
Raul Castro has promised economic reforms to revive the country's battered economy once his brother dies.
Falcoff said: "He'd like to have better relations with the United States. A move his brother has shot down."
Groups infiltrated
Cuba labels all dissidents "counter-revolutionaries" and "mercenaries" on the payroll of the United States.
They are not well known in Cuba, where they have no voice in the government-controlled media.
Palacios said opposition unity had been hard to achieve due to what he called a police state that has infiltrated dissident groups and "divided those who unite".
Paya, Palacios and other prominent dissidents such as human rights activist Elizardo Sanchez and economists Martha Beatriz Roque, Vladimiro Roca and Oscar Espinosa Chepe, issued a call to "Unity for Freedom" in April, deeming Cuesta Morua's initiative too moderate.
Cuesta Morua said: "The opposition is less divided than before, but it is still divided. Unity is not around the corner."