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However, Ehud Olmert, Israel's outgoing prime minister, has rejected a prisoner swap with Hamas for Gilad Shalit, an Israeli soldier who has been held in Gaza for three years.
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He said Israel had agreed to free hundreds of prisoners, but could not cede to Hamas demands for still more to be released.
"Israel presented generous far reaching proposals to the other side that were supposed to bring about the release of Gilad," Olmert said.
"I approved these proposals that meant in practice that hundreds of terrorists would be released, including some who killed Israelis. These proposals were rejected, no others will be offered to Hamas".
Two days of indirect talks in Cairo fell apart late on Monday, with Israel accusing Hamas of raising its demands.
However, Osama al-Muzaini, a Hamas spokesman, denied any change in the group's demands, and accused Israel of impeding the prisoner swap deal.
"The Israeli enemy is the one putting obstacles before the conclusion of this deal," he told Al Jazeera.
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"If they want this deal to be concluded, they have to accept the demands of the resistance either by the current Israeli government or by the next one. We will not release Shalit until all our demands are met."
Courtesy: Al Jazeera
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