The deal over the release of kidnapped Israel Defense Forces soldier Gilad Shalit will be solved before the end of the Muslim month of Ramadan in two weeks, senior Hamas official Ahmed Yousef said on Friday.

The deal would allow Shalit to be released in exchange for hundreds of Palestinians imprisoned in Israeli jails, Yousef told the Kuwaiti daily A-Rai Al-Am.

The Hamas official, who serves as an adviser to Palestinian Prime Minister Ismail Haniyeh, said an Egyptian team was continuing to mediate between Israel and Shalit's captors, adding that they had delivered letters from Shalit to his parents indicating that he is still alive.

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Yousef denied reports of Syrian involvement in the prisoner exchange negotiation process. "This is a matter within the Gaza Strip, and all of the sources handling the negotiations are there as well," he said.

He said the majority of negotiations with Hamas was taking place in the Palestinian territories and with officials jailed in Israel, with the considerations of Damascus-based exiled Hamas leaders.

In his interview, Yousef also reiterated Hamas' refusal to recognize Israel. "Hamas' point of view with regard to peace agreements is based on the principle of hudna [cease-fire]," Yousef said, adding that the Palestinian-Israeli conflict was long from finished.

Report: Exiled Hamas chiefs condition Shalit release on their return
Exiled Hamas leaders based in Damascus have said they are willing to release captive IDF soldier Gilad Shalit from Gaza if they were allowed to return to the Strip, Israel Radio reported Friday morning.

The radio report was based on an article released Thursday in the Nazareth-based daily Al-Sinara.

The report added that the Hamas leadership in Gaza is willing to release Shalit in exchange for ten Palestinian prisoners held in Israeli jails, but senior members in Damascus rejected the plan.

The Damascus-based leadership reportedly support the plan only if Khaled Meshal, exiled leader of the group's political wing, was returned to Gaza along with other senior officials.

Hamas turned down an Israeli offer to free between 900 and 1,000 Palestinian prisoners in exchange for captured Israel Defense Forces soldier Gilad Shalit, Egyptian Foreign Minister Ahmed Abul Gheit said Monday.

"Egypt succeeded in securing a swap deal with Israel to free [Palestinian] women, children, elders and those who have been serving long prison terms in exchange for the soldier," Abul Gheit told Al Arabiya television. "A deal that could have guaranteed freeing 900-1,000 prisoners- but sadly they have decided to keep holding him [Shalit]," said Abul Gheit.

The negotiations between Israel and Hamas on a potential prisoner exchange have so far failed to make progress on any of the major issues.

"It is obvious to both sides that there will be a prisoner exchange," sources close to the negotiations told Haaretz, "But there is no concrete understanding on how many prisoners will be released in exchange for Shalit, who they will be, and when.

"We have not even begun the real negotiations on implementing the deal, on the mechanism which will bring about the release of Shalit and the Palestinian prisoners," said the sources. "We are still at the stage [of discussing] principles."

Egypt is continuing its mediation efforts despite reports that it was no longer involved in the negotiations due to tensions between Hamas and the Egyptian government.