Senior Hamas officials have completed their consultations in Damascus over Israel's offer for a prisoner exchange deal to see the release of abducted Israeli soldier Gilad Shalit, the London-based Arabic-language daily Al-Hayat reported on Thursday.

The delegation is expected to bring its final response to German mediators in Cairo later Thursday, said the daily.

Israel is reportedly still refusing to release 22 Palestinian prisoners involved in some of the worst terror attacks, including Tanzim leader Marwan Barghouti, secretary general of the Popular Front for the Liberation of Palestine, Ahmed Sa'adat, and two of the heads of Hamas' military wing in the West Bank, Ibrahim Hamad and Abdullah Barghouti, who are responsible for the murders of dozens of Israelis in suicide bombings.

The names on Israel's list include 15 militants from the West Bank and seven from the Gaza Strip.

Israel is also reportedly refusing to release 44 prisoners from East Jerusalem and 20 Israeli Arabs arrested before the Oslo Accord.

Al-Hayat reported that Israel has retreated on an original agreement it reached with Hamas, after advised by the U.S. and some Arab states not to give in to the Islamist group's pressure.

Meanwhile, the internal security apparatus of Hamas claims to have foiled an Israeli attempt to collect intelligence on where kidnapped Shalit is being kept. According to the head of Hamas' internal security service, Abu Abdullah, the Shin Bet security service has tried gathering intelligence through members of the rival Fatah organization who have operated in the Gaza Strip in the past.

The report appears to be mostly an attempt to smear the Palestinian Authority and its activities. Abu Abdullah said in an interview to a Web site affiliated with Hamas, Falastin Alan, that the Fatah operatives hired a house and cars in the eastern part of Gaza City and planned to kidnap a senior figure in the military wing of Hamas and bring him to Israel. He did not specify when the operation was to take place. On the other hand, a member of the Hamas politburo, Izzat al-Rishq, stressed in an interview to the Arabic language TV station Al-Jazeera that the Islamist Palestinian group is continuing consultations on the proposal relayed to it by the German mediator.

Rishq rejected the report Tuesday by TV station Al-Arabiya that Hamas had turned down the proposal.

The Hamas official refused to offer details on the substance of the proposal from Israel or comment on problems that Hamas may have with it.