Hamas transferred abducted Israel Defense Forces soldier Gilad Shalit to Egypt a few days ago as part of the prisoner exchange for his release, the Kuwaiti daily newspaper Al-Jarida reported early Thursday.
Commentators have questioned the reliability of the report, which Israel and Hamas have yet to comment on.
The newspaper quoted sources as saying that Shalit has been taken to a secret and secure location in the country, accompanied by Ahmed Jabari, head of Hamas' military wing and senior Hamas official Mahmoud Zahar.
Israel has been waiting for Hamas' official answer to the German mediator's proposal on the final prisoner exchange deal. The Islamist group is expected to respond within the next few days.
The mediator met separately over the past few days with representatives of both sides.
Arab media reports have said Hamas is likely to present additional conditions for the agreement, which Israel has already agreed to in principle.
The main remaining dispute, said the reports, is over a few senior prisoners who are described as "symbols of the Palestinian struggle." It seems Hamas has concluded it will be difficult to convince Israel to free the senior Hamas leaders.
Therefore, Hamas will likely focus its demands on two prisoners not from Hamas: Marwan Bargouti of Fatah, and the secretary general of the Popular Front for the Liberation of Palestine, Ahmad Saadat. One option is that Israel may release them and ban them from the West Bank, reported the Al-Arabiya network.
The final negotiations center on which senior prisoners Israel will release.
Even if Hamas agrees to the deal, Israel will still have to do several things in order for it to be implemented - the inner cabinet and full cabinet will have to vote on it, the prisoners will have to be gathered and prepared, and the list of prisoners will have to be published 48 hours in advance in order to allow petitions to the High Court of Justice.
Hamas is conducting most of its deliberations in Damascus, where the organization's political wing, headed by Khaled Meshal, is headquartered. Arab media sources say Meshal has been taking a hard line, while the organization's leadership in Gaza is more interested in reaching a deal with Israel. The Gaza leadership expects an agreement to lead to the end of the blockade on Gaza and a gradual opening of the border crossings.
Hamas has denied recent Palestinian Authority claims that it is holding direct talks with Israel over a long-term cease-fire, and not only the Shalit deal.
If there are no major developments this week, then the Shalit family will resume its round of meetings with ministers next week to gather support for a deal. The family, and its representatives, have yet to meet with any Labor Party ministers, but they said that was not intentional.
On Wednesday Gilad's father, Noam Shalit, met with Justice Minister Yaakov Neeman in an unscheduled meeting in the Knesset. Shalit also met two Shas ministers, Interior Minister Eli Yishai and Religious Services Minister Yaakov Margi. Shalit said he received no new information.
Meanwhile, Hezbollah leader Hassan Nasrallah met in Lebanon Wednesday with officials from Hamas' political bureau, and discussed the two Iran-backed militant groups' relations and U.S. policy in the Middle East.
Hezbollah's Al-Manar television network, which reported the meeting, made no mention of negotiations between Hamas and Israel over Gilad Shalit, but Israel's Channel 10 said it was believed that the parties did in fact discuss the developing deal.
President Shimon Peres accused Hamas of holding up the deal Wednesday.
"The delay is not caused by the Israeli government but rather by the other side - there are internal disagreements within Hamas," Army Radio quoted Peres as saying in a speech to students at Kibbutz Yotvata.
"If Hamas returns to its original demands, which are already very high, we will see Gilad Shalit return home."
Peres added that if Israel and Hamas agree to the deal, he would have to pardon many Palestinian prisoners. Peres said he is "encouraging" the negotiations, and is aiding the government on the issue.
"I am convinced that the government is doing everything it can to bring about the release of Gilad Shalit," he was quoted as saying.
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