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Senior government officials in Jerusalem denied Saturday morning reports that Israel had backed out of a deal negotiated with the Popular Resistance Committees outlining the release of captive Israel Defense Forces soldier Gilad Shalit in exchange for senior Palestinian officials held in Israeli prisons.

Israel Radio reported Saturday that Abu Mujahed, a spokesman for the PRC in the Gaza Strip, said that Israel had rejected the agreement at the last minute.

Abu Mujahed told a Palestinian news agency on Saturday that Egypt had drafted an agreement that met the demands of the Palestinian captors, who kidnapped Shalit last June in the Gaza Strip, but Israel rejected the deal at the last minute.

On Friday, Abu Mujahed said in an interview with the Nazareth-based A-Sinara newspaper that the prisoner exchange would include all the leaders of Palestinian factions jailed in Israel, including Marwan Barghouti of Fatah, Ahmed Sadaat and Abdel Rahim Maluah of the Popular Resistance Committees, and leaders of Hamas.

Abu Mujahed said that the PRC is awaiting Prime Minister Ehud Olmert's approval in order to carry out the exchange.

He said that if Israel rejects the offer, "we would then return to the starting point."

"The exchange includes plans to free security prisoners who are citizens of Israel, within the framework of the exchange between Israel and Hamas," said Mounir Mansour, chairman of the Association for Prisoners' Welfare to Haaretz.

He said the exchange would include five such prisoners, including Sami Yunis, 77, and his cousin Maher Wakrim Yunis of the northern village of Ara, and Safi Manour of Tira.

All of these prisoners are serving life sentences.

The name of Hafez Kundus of Jaffa, serving 29 years, was also mentioned.

A report on the Al-Jazeera website indicated that the inclusion of these security prisoners was a major point of dispute in the negotiations.

Suleiman Abu Snina, minister-designate for prisoner affairs in the Palestinian unity government, said Israel demanded at the beginning of the negotiations exclusive control over the names of the prisoners, and refused to allow the release of prisoners who are Israeli citizens.

The Palestinian negotiators, however, refused to compromise on their position.

Abu Mujahed said he could not speak about the issue of the release of prisoners who are Israeli citizens, but said Israel refused to negotiate on the matter.

He called on Noam Shalit, the father of the captive soldier, to pressure the Israeli government to push the issue of an exchange, and said that his son's keepers are treating him humanely.