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Prime Minister Ehud Olmert said on Monday that Israel intends to remove roadblocks between Palestinian towns in order to grant Palestinians "increased freedom of movement."

"The political clout we will gain is worth the increased risk," Olmert said during a briefing with the Knesset Foreign Affairs and Defense Committee.

The prime minister also said that he intends to release 250 prisoners in order to convey to the Palestinian people that "when they fight Hamas and accept the Quartet's conditions, they will receive something in exchange."

He emphasized that he was referring only to prisoners without "blood on their hands," who have not been involved in violent acts against Israelis.

Olmert noted that he had promised not to release prisoners if Hamas took part in the Palestinian Authority, but that things had changed since PA Chairman Mahmoud Abbas dismissed Hamas and formed an emergency government after the Islamic group seized control of the Gaza Strip last month.

"The minute that Abu Mazen resumes contacts with Hamas, Israel will cut off contacts with him," Olmert said, referring to Abbas.

However, he said, "I don't want to delude anyone into thinking there won't be attempted attacks from Judea and Samaria," using the Biblical name for the West Bank.

"There are terrorists there. We will fight them and they will attempt to carry out terror attacks," he added.

Olmert told the committee that United States President George Bush is determined to sign a ten-year agreement with Israel, which "will substantially increase foreign aid to Israel, as we requested."

He said that the intention to increase aid reflects the understanding demonstrated by the Americans regarding the increased threat to Israel and the need for Israel to equip itself against this threat.