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A breakthrough has occurred in negotiations over a deal to free kidnapped soldier Gilad Shalit in exchange for hundreds of Palestinian prisoners, senior Hamas officials said yesterday.

This is the first time since Shalit's abduction that Hamas leaders have publicly announced a breakthrough in the talks.

But Israeli political and military sources both said that they were unaware of any such progress. "We are not aware of any breakthrough or major progress in the deal to free Gilad Shalit," said one government source.

The Israeli sources also denied media reports that Shalit's family had received a video of the kidnapped soldier, as did the family itself.

Ahmed Yousef, Palestinian Prime Minister Ismail Haniyeh's political advisor, told the Palestinian news agency Ma'an yesterday that he expects the first Palestinian prisoners to be released early this year, and that Thursday's planned meeting between Prime Minister Ehud Olmert and Egyptian President Hosni Mubarak would significantly advance the emerging deal.

Other Palestinian sources told Haaretz that Hamas has agreed in principle to an Israeli proposal for an exchange that was transmitted via Egyptian intelligence chief Omar Suleiman.

Suleiman, who is currently in Saudi Arabia, met there with Haniyeh, and apparently also with Khaled Meshal, the head of Hamas' Damascus-based political bureau.

The sources said that under the Israeli proposal, Hamas would give Israel a video showing that Shalit is alive, and in exchange, Israel would release an as-yet undecided number of women and minor prisoners.

Next, Shalit would be transferred to Egypt, and then to Israel; at the same time, Israel would release some 450 Palestinian prisoners. Hamas would give Egypt a list of the prisoners it wants released, and Israel would be asked to approve this list.

Finally, about two months later, Israel would release additional prisoners. Israel would be authorized to decide both how many and which prisoners to free at this stage, but has promised to be "generous," the sources said.

A spokesman for Hamas' military wing, Abu Obeida, confirmed to Haaretz that there had been a breakthrough in the talks. However, he said, there is as yet no timetable, and "we can't say whether we're talking about days or weeks."

A spokesman for the Popular Resistance Committees (PRC), which carried out the kidnapping jointly with Hamas, also confirmed the reported breakthrough. The spokesman, Abu Mujhad, declined to give details, but said that Israel had moved significantly closer to the Palestinians' demands.

Ismail Radwan, Hamas' spokesman in Gaza, similarly said that "there has been very positive progress" in the negotiations.

And Egyptian Foreign Minister Ahmed Aboul Gheit told the London-based newspaper Al-Hayat yesterday that "the deal is ready." But Aboul Gheit, who noted that Olmert and Mubarak would discuss the deal at their meeting this week, said that the other parties are still awaiting a final decision from Hamas.

Israeli sources, in contrast, said that they were unaware of any breakthrough. Nevertheless, defense sources said, public declarations of an impending deal by both Hamas and the PRC indicate that both organizations have apparently softened their positions.

It seems that the main outstanding issue is which prisoners will be on the list of 450 to be freed along with Shalit. Negotiations on this issue could yet delay the deal.