Israel announced on Saturday it will release some Palestinian prisoners as a "gesture", after the two sides agreed to lay the groundwork to resume peace negotiations frozen for three years.
Some of those to be freed have been in prison for decades, Israeli Intelligence Minister Yuval Steinitz said.
His announcement came hours after US Secretary of State John Kerry said Israeli and Palestinian negotiators had agreed to meet to pave the way for a resumption of direct peace talks.
The last round of direct talks broke down in 2010 over the issue of Israeli settlements in the West Bank and east Jerusalem.
Speaking on privately owned Channel 2, Israeli Justice Minister and chief peace negotiator Tzipi Livni noted that while there were no preconditions to talks, "everything will be on the table", including the 1967 borders and east Jerusalem, which the Palestinians want as their future capital.
Steinitz said his government would engage in the staggered release of a "limited number" of prisoners, some of whom he defined as "heavyweights", who have been in jail for up to 30 years.
"There will definitely be a certain gesture here", he said, without noting how many prisoners were to be freed.
According to Israeli rights group B'Tselem, at least 4,713 Palestinians are imprisoned in the Jewish state.
Their release is one of the Palestinians' key demands for resuming peace talks, particularly the 107 prisoners arrested prior to 1993, when the Oslo peace accords were signed.
An Israeli official said no prisoners would be released before direct talks begin, and the process would then be dependent on the Palestinians proving they are "really serious and not playing games".
"It won't happen tomorrow and not next week," the official told AFP, speaking on condition of anonymity. He could also give no indication of the number of prisoners involved.
He said the releases, once they begin, would take place in stages and include "pre-Oslo prisoners, prisoners set to be released anyway, and those the Palestinians 'forgot' during the Oslo accords".
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Steinitz said Israel would not compromise "diplomatic issues", and that there was no agreement on a settlement construction freeze or on accepting the borders that existed prior to 1967 Six-Day war as the basis for talks, as the Palestinians demand.
He said the Palestinians had committed to "negotiate seriously" for "at least nine months", during time which they would refrain from taking action at the United Nations and other international institutions.
Kerry gave away very little detail of the agreement, which came after four days of consultations with Israeli and Palestinian leaders, saying both sides had reached "an agreement that establishes a basis for resuming direct final status negotiations".
"This is a significant and welcome step forward," he added, having doggedly pushed the two sides to agree to resume talks in six intense trips to the region since becoming secretary of state in February.
A State Department official said Kerry had wrenched a commitment from both sides "on the core elements that will allow direct talks to begin".
The Israelis and Palestinians remain far apart on final status issues including the borders of a future Palestinian state, the right of return of Palestinian refugees and Jerusalem.
Palestinian president Mahmud Abbas has also repeatedly called for a freeze to Israeli settlement building and a prisoner release.
"The ball is now in Israel's court," a Palestinian official said, speaking on condition of anonymity.
"Kerry has proposed the bases for a resumption of negotiations and asked (Israeli Prime Minister Benjamin) Netanyahu to respond favourably to one of them.
"The bases are the release of Palestinians jailed before the Oslo accords, minors, the sick or the elderly," he said. "And that Israel recognise the 1967 (border) lines as a reference point, or a halt to settlement building."
The official said Netanyahu had agreed to hold a special cabinet session to draw up Israel's response to Kerry's proposals.
The Islamist Hamas movement which runs the Gaza Strip rejected a return to talks, saying Abbas had no legitimate right to negotiate on behalf of the Palestinian people.
And the leftist Popular Front for the Liberation of Palestine warned that "a return to talks outside the framework of the United Nations and its resolutions would be political suicide".