Israel says it plans to release 87 Palestinian prisoners on Monday in a move aimed at bolstering Palestinian President Mahmoud Abbas in his power struggle with the militant group Hamas.
Officials say none of the prisoners to be freed is serving time for attacking Israelis.
Also Tuesday, Israeli Infrastructure Minister Benjamin Ben-Eliezer called for the release of Fatah leader Marwan Barghouti, the most prominent Palestinian prisoner in Israel.
Barghouti is serving five consecutive life-time sentences for five deaths resulting from suicide attacks, beginning in 2000.
Ben-Eliezer said Barghouti's release could help advance political negotiations and bring about the release of Israeli soldier Gilad Shalit, seized by Gaza militants more than a year ago.
In other news, Israel's largest bank said it is cutting its last remaining ties with Palestinian banks in Gaza, which is controlled by Hamas.
Last week, the Israeli government declared the Gaza Strip an "enemy entity" because Palestinian militants have been firing rockets into Israel from the territory.
Hamas seized control of the Gaza Strip in fighting with President Abbas' Fatah group in June.