Israel has been holding four Palestinian militants since May on suspicion of plotting to kidnap Israelis for use as bargaining chips for their jailed leader, the security service said on Monday.
The Shin Bet statement ended a protracted media blackout on the arrest of the four members of the leftist Popular Front for the Liberation of Palestine.
"In May, Shin Bet agents, backed by the army and police, arrested an armed PFLP cell that was preparing to kidnap Israelis for use as bargaining chips to secure the release of Palestinian prisoners," the statement said.
It said the four were suspected of plotting to seize "soldiers or settlers" with the aim of securing the release of jailed PFLP leader Ahmed Saadat.
It said the four were charged with illegal possession of weapons before a military court, which remanded them in custody until trial.
The Shin Bet statement said that Saadat was jailed in Israel for his "involvement in several terrorist attacks, notably the murder of (Tourism) Minister Rehavam Zeevi."
In fact, Israeli prosecutors dropped charges against the PFLP leader of involvement in the October 2001 murder in annexed Arab east Jerusalem of the far-right Zeevi.
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A military court in December 2008 sentenced Saadat to 30 years in prison for heading a "terrorist organisation."
Saadat had been seized by Israeli forces in a controversial 2006 raid on a Palestinian prison in the West Bank town of Jericho where he was being held under British and US supervision.
Then Palestinian leader Yasser Arafat had detained him in January 2002 as one of Israel's conditions for lifting a siege on his West Bank headquarters in Ramallah.
His detention came after the PFLP claimed the killing of Zeevi, an ultra rightwinger who supported the ideology of "transfer," which would see all Palestinians in the West Bank and Gaza Strip expelled to neighbouring Arab countries.
While in prison, Saadat was elected to the Palestinian parliament in January 2006.
The PFLP leader was among several high-profile Palestinian prisoners who were excluded from an exchange last year in which hundreds were freed in return for the release by Gaza militants of Israeli soldier Gilad Shalit.
Saadat has been held in solitary confinement for extended periods and has gone on hunger strike more than once.