Prime Minister Ehud Olmert said on Sunday that Israel should be proud of the prisoner swap deal implemented last week with Hezbollah, under which five Lebanese prisoners and nearly 200 bodies of enemy dead were returned in exchange for the remains of abducted Israeli soldiers Eldad Regev and Ehud Goldwasser.

Olmert told ministers at the weekly cabinet meeting in Jerusalem that, "Israel can be proud of the fact that we pay a high price," saying it shows Israeli soldiers that their country will spare no effort to bring them home, even if that home is the military cemetery.

Olmert also said it shows Israel's values "are completely different from those of our enemies."

The prime minister also told the cabinet he believes Israel Defense Forces soldier Gilad Shalit, who has been held captive by Palestinian militants in Gaza since 2006, would be returned to Israel alive and well.

At the opening of the weekly cabinet meeting, Olmert said "I have called the Shalit family and promised them in all our names that we would do everything possible to bring Gilad Shalit home alive, healthy and whole as soon as possible."

"I don't need to tell you how difficult that it is, it's not easy, just as we worked hard for two straight years every day to bring home Udi and Eldad may their memories be blessed," Olmert continued, referring to two IDF reservists whose bodies were returned to Israel last week in a prisoner exchange deal with the Lebanese militia Hezbollah. "I believe he will come home alive and well, and we won't rest and we won't be a peace until he is returned," the prime minister went on to say.

Olmert spoke one day after Hamas confirmed that negotiations over Shalit's release were officially on hold. A senior Hamas figure said Saturday that once the group understood that Israel was not fulfilling its end of the cease-fire agreement, it had decided that continuing the Shalit talks would be futile at this time.

Shalit was captured by Palestinian militants in June 2006 and has been held in Gaza since.

The source told Haaretz on Saturday it was unlikely a Hamas delegation would depart for Cairo where renewed talks on a possible exchange deal would take place under an Egyptian aegis.

However, despite the charges directed at Israel, Palestinian sources believe Hamas isn't willing to be flexible about Shalit at this time due to a recent prisoner swap with Hezbollah, in which Israel released five Lebanese prisoners in exchange for the remains of two IDF reservists who were seized by Hezbollah in July 2006.

The same sources noted that the release of Samir Kuntar has led Hamas to the conclusion that the radical Islamic organization should stick to its demands, which includes the release of 1,000 prisoners, many of whom were sentenced to life in prison for their role in suicide bomb attacks.

At a political rally in the Gaza Strip on Saturday, Ismail Haniyeh, who was prime minister in a Hamas-led Palestinian government, called on Interior Minister Said Sayam, to issue Samir Kuntar a diplomatic passport.

In an aggressive tone, Haniyeh told the crowd in Gaza that Hamas will not give in on "any issue" related to the release of Shalit.

Hamas will insist on the release of prisoners who were sentenced to life in prison. He concluded his speech by shouting "Jerusalem is ours, Gaza, Haifa, Jaffa, all of them are ours."

Meanwhile, a member of Fatah was shot and killed early in the northern Gaza Strip on Saturday morning, after his home came under attack by militants.

Witnesses said that gunmen attacked the house of Abdel Salam Abu Taqia, 23, near Jabaliya refugee camp and killed him.

Hours later, Hamas announced the murderer was arrested, and claimed the incident was motivated by family differences.