Egypt and Israel are adding the "final touches" to a deal to swap an Israel-American detained in Cairo for a group of Egyptian prisoners and children, the official MENA news agency said on Saturday.
"MENA has learned that the final touches are currently being made for a deal to swap Israeli spy Ilan Grapel, accused of spying on Egypt for Israel."
"After Egyptian efforts, the number of Egyptian prisoners held in Israeli jails to be released will be increased to between 20 and 30 prisoners," a high-level official told MENA.
The state agency had initially said that 16 Egyptians would be released in the deal, in addition to three children.
According to MENA, the three children had been acquitted by an Israeli court of illegally crossing into Israel to sell cigarettes, but prosecutors appealed the ruling.
The caretaker cabinet tasked the foreign ministry on Thursday to oversee the exchange, two days after Israel freed hundreds of Palestinians for an Israeli soldier held by the Palestinian movement Hamas in an Egyptian-mediated swap.
Grapel, who has been in custody since June 12, is accused of being an agent of Israel's Mossad intelligence agency and of sowing sectarian strife and chaos in Egypt during the uprising which ousted president Hosni Mubarak in February.
Egyptian media published photographs of Grapel after his arrest in Cairo's Tahrir Square, the epicentre of the uprising, inside a mosque and in a downtown Cairo bar.
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Pictures taken from his Facebook account showed him in Israeli military uniform.
Grapel served in the military like most Israelis as a conscript and was wounded in its 2006 war with the Lebanese militant group Hezbollah.
Israel has strongly denied Egypt's accusations, insisting the whole thing was a mistake and accusing Egyptian authorities of "bizarre behaviour."
Last week, unnamed Israel officials told public radio that a deal was in the works to release a US-Israeli joint national held in a Cairo prison in exchange for 81 Egyptians held in Israel.
News of the alleged deal emerged the day before the Egyptian-brokered prisoner swap which saw Israel agree to release a total of 1,027 Palestinians over two months in exchange for captive soldier Gilad Shalit.
Details of an exchange were first reported by Egypt's state-owned Al-Ahram daily, which said an accord was close "in which the spy Ilan Grapel... will be released in return for all Egyptians held in Israeli prisons."
Israel is holding 81 Egyptian prisoners, including three children, most of whom face criminal charges, including illegal entry to Israel, drug trafficking and arms possession.
"The success of the Egyptian mediation of the Shalit deal and Israel's formal apology to Egypt for the death of Egyptian soldiers killed on the border by Israeli fire certainly cleared the road for making the Grapel deal," Al-Ahram said.
Six Egyptian policemen were killed by Israeli fire on August 18 as Israeli troops chased Palestinian gunmen who carried out a series of shooting attacks that killed eight Israelis.