Three weeks after the end of the war in the Gaza Strip, there are reports of progress on a long-term cease-fire.
Israel's Cabinet discussed a three-stage Gaza truce proposal mediated by Egypt. It includes an 18-month cease-fire and a prisoner swap for a captive Israeli soldier held for more than two years by the Islamic militant group Hamas that rules Gaza. Israel and Egypt would open at least two border crossings into Gaza, easing a crippling blockade.
Israel has signaled that is now prepared to pay a higher price for the captive soldier, Gilad Shalit.
"The effort to free Gilad Shalit is a supreme effort," said Defense Minister Ehud Barak.
Israeli and Arab media reports say Israel is willing to trade Shalit for a thousand Palestinian prisoners, including top militants responsible for deadly suicide bombings.
But Prime Minister Ehud Olmert denied it.
These reports are "exaggerated and harmful," Mr. Olmert said, adding that when there is a deal he will reveal it to the public.
A Hamas delegation, led by a top Gaza official, is in Egypt for talks on a long-term cease-fire with Israel.
Senior Hamas official Mahmoud al-Zahar was asked by reporters if there has been progress on a prisoner exchange.
He responded that all the reports on the possible release of Shalit were part of what he called "Israeli election propaganda."
National elections take place on Tuesday, and movement on a prisoner swap could boost the chances of two candidates for prime minister, Foreign Minister Tzipi Livni and Defense Minister Ehud Barak.
Final polls show both of them trailing hawkish former Prime Minister Benjamin Netanyahu, with Livni running a close second and Barak a distant third. Livni and Barak support the creation of a Palestinian state; Netanyahu does not.