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Prime Minister Ehud Olmert said Tuesday that Israel would not concede to Hamas' demands in a prisoner swap deal for abducted Israeli soldier Gilad Shalit.

After briefing the cabinet for more than three hours on the status of intensive weekend negotiations in Cairo which came to a deadlock a day earlier, Olmert said that ministers had agreed Hamas' demands were impossible to meet.

"Israel presented generous far reaching proposals to the other side that were supposed to bring about the release of Gilad," Olmert said in a televised address hours after the closed-door meeting.

"I approved these proposals that meant in practice that hundreds of terrorists would be released, including some who killed Israelis. These proposals were rejected," he said. "Others will not be handed over to Hamas."

"Over the last years we have held meetings with unlimited channels, in different places around the world," Olmert said. "Unfortunately, we have are entangled with a cruel body, lacking basic human sentiment, murderous, unscrupulous, which was not ready to respond to the challenge.

"I want to say here, on behalf of the State of Israel and its government, we have red lines and we will not cross them," said Olmert, but added that efforts for Shalit's release would continue.

An Israeli political source said following the cabinet briefing that Israel would not ease its blockade of the Gaza Strip until Shalit was freed by the enclave's Hamas Islamist rulers.

"The crossings ... are operating at a minimum to prevent a humanitarian crisis in Gaza," the source said following a special cabinet briefing to dicuss the negotiations. "And they [the crossings] will remain so until Gilad Shalit is released."

The Egyptian-brokered talks hit an impasse over Israel's refusal to free all 450 long-serving Palestinian prisoners sought by Hamas in exchange for Shalit, seized by Palestinian militants who tunnelled into Israel from the Gaza Strip in 2006.

Olmert had agreed to free more than 320 of the 450 prisoners on the Hamas list, Israeli political sources said. But he balked at releasing those who orchestrated the deadliest bus and cafe bombings that have killed scores of Israelis since the outbreak of a Palestinian uprising in 2000, the sources said.

Israel to publicize Hamas demands in Shalit deal

Meanwhile, the cabinet decided on Tuesday to publicize the list of Palestinian prisoners Hamas has demanded be freed. The list includes hundreds of prisoners with "blood on their hands," including terrorists sentenced to multiple life terms.

"The prime minister was ready for far reaching concessions, way beyond what some of the ministers were ready for," Justice Minister Daniel Friedmann said after the briefing. "At the same time, Hamas's demands reached such proportions that in our assessment, no Israeli government could accept."

Shin Bet Chief Yuval Diskin voted in favor of releasing Hamas' list, according to a participant of the briefing, because he believes it is important for the Israeli public to see exactly who the Islamist group wants released in the deal.

Israel and Hamas blame each other for deadlocks

A Hamas leader said on Tuesday it hoped Israel would resume talks, as the two sides traded blame for the failure of the negotiations.

"I hope that Olmert will listen to the voice of reason and come back to pursue the talks to reach a deal by meeting [our] conditions," senior Hamas official Osama Hamdan told Reuters by telephone from Lebanon.

"If the Israeli government sticks to its negative position, it will not be possible to clinch a deal, at least at the present time... If Israel wants to reach a deal, it should come with a serious offer," he added.

Hamdan also said said Israel's insistence on toughening its stance over the course of the negotiations had contributed to the failure to reach a deal.

Earlier Tuesday, Deputy Prime Minister Eli Yishai said it was unlikely that Olmert's outgoing government would close a deal to secure Shalit's release.

"This government apparently won't bring back Gilad Shalit," said Yishai, who will likely be a senior partner in Prime Minister-designate Benjamin Netanyhu's coalition. "The next government will be bound by the same force to return Gilad."

Sources: Ministers' declarations hurt Shalit talks

Israeli sources involved in the negotiations, meanwhile, accused ministers on Tuesday of having seriously harmed the talks by making declarations in support of paying a high price to secure the abducted soldier's release.

"The conduct of ministers gave Hamas a feeling that the domestic pressure in Israel was intolerable," the sources said. "They saw this as an opportunity and radically toughened their demands, out of an understanding that Israel would agree to this."

Both the Israeli negotiators and Olmert's bureau are stressing that the talks will not be halted. They believe, however, that the negotiations' fate has been sealed for the prime minister's remaining time in office.

They say it is likely that the talks will continue along quieter channels, but only after Netanyahu takes office and formulates his policy on the matter.

Source: Diskin, Dekel 'shocked' at new Hamas demands

Olmert's special envoy on the prisoner exchange, Ofer Dekel, and Shin Bet chief Diskin returned from Egypt on Monday night,f ollowing the two days of intensive negotiations. At a briefing for Olmert and his advisers upon their return, the two blamed Hamas for what they called its unwillingness to show flexibility to reach an agreement.

Dekel and Diskin told Olmert that Hamas had actually toughened its stance and returned to positions it had held in the negotiations a year ago.

Sources said Monday that at a certain point during the negotiations Diskin and Dekel sent over the final Israeli offer. When the Egyptian officials returned with the Hamas offer, the Israeli envoys were shocked to realize that the Islamist group had posed new demands.

"They raised demands of someone who did not wish for a solution," a source said the two men had told Olmert. "The demands came out of nowhere and there was a huge discrepancy between that and things that had been discussed in the past."

Most of the Hamas demands revolved around several dozen prisoners that the group wants freed, and over the issue of whether the freed prisoners would be allowed to return home to the West Bank.

"Despite generous offers put forth by Israel in order to further and conclude the negotiations and gain Shalit's release, Hamas opted to reject everything," the Prime Minister's Bureau said in a statement Monday night.

Meanwhile, a senior Egyptian source told Haaretz that there were significant difficulties in the negotiations. The source said progress in the deal depends on "political decisions that Israel must make."

The source said the main dispute was the number of prisoners released who would be expelled from the West Bank. Hamas appears to agree to the expulsion of only five prisoners on its list, while Israel wants to send dozens abroad.

The prime minister's military secretary, Major General Meir Klifi, updated Shalit's father Noam on the details of the meetings in Cairo.

Olmert also briefed Netanyahu, who had hoped the Shalit case would be over before he took office.

"It is no secret that the last thing that Bibi wants is to have to make a decision on Shalit," a senior source at Likud told Haaretz, using Netanyahu's nickname. "He had hoped that this matter would be over during Olmert's tenure, so he is backing him and is not interfering," the source added.

"Nearly every person from Likud who has been designated to be a minister prefers to see the current government decide the Shalit matter. It is a huge burden."