The negotiations for the release of the abducted Israeli soldier Gilad Shalit are not progressing, according to sources involved in the mediation efforts.

The sources said Thursday there had been no agreement between Israel and Hamas on the basic principles of an exchange deal that would involve the release of Shalit and Palestinians held in Israeli prisons.

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While it is clear to both sides that a prisoner exchange will have to take place as part of the deal, there is no agreement on the number of Palestinians that will be released in return for Shalit. There is also no progress on the timing and the form of such an exchange.

"The contacts are still in place, and they are trying to reach a fundamental breakthrough," the sources said.

According to the sources there has been no progress during the past week.

"We have still not even begun the real negotiations on implementing the deal, the mechanism that will result in the release of Shalit and the Palestinian prisoners. We are still at the stage of principles," the sources involved in the mediation added.

The sources stressed to Haaretz that "Egypt was and remains the main mediator in the Gilad Shalit affair." They denied reports in the Palestinian daily Al-Ayyam that Hamas had halted contacts with Egypt on the matter of Shalit.

"The contacts are ongoing," the sources said.

However, the reports in the Palestinian daily have not been denied by senior Hamas officials in Damascus, and it appears that contacts with Egyptian mediators, at least at this stage, have slowed down but have not been broken.

In the Gaza Strip, Hamas officials are still meeting with Egyptian interlocutors.

So far, neither Egypt nor Hamas has denied reports regarding a letter sent by Egyptian Information Minister Omar Suleiman to Khaled Meshal, head of the Hamas political office, based in Damascus.

In the letter, Meshal was warned that if he refused to release Shalit by the end of Ramadan (October 22), he will be responsible for an extensive Israeli military operation in the Gaza Strip.

The fact that news of the letter leaked to the press suggests a genuine crisis in the talks between Egypt and Hamas.

According to the reports in Al-Ayyam, Palestinian Authority Chairman Mahmoud Abbas informed the PLO Central Committee that Hamas has frozen most of its contacts with Egypt on Gilad Shalit and is demanding a change in the mediating country.

Abbas traveled to Qatar on Wednesday for talks, apparently on this issue. Khaled Meshal also traveled to Qatar, and it is possible that a meeting between the two will be arranged.

The option that Qatar will take over the mediation is also being considered, although the newspaper said that this has not been confirmed.

Meanwhile, the crisis over the lack of funds for the payment of wages to Palestinian Authority civil servants intensified yesterday, with a violent protest by security officers in the Gaza Strip.

"Our protest is not motivated by politics," they said. "We are driven by the hunger of our children. Abbas or [PA Prime Minister Ismail] Haniyeh, we don't care about their problems. We only care about our welfare."