Envoys in last-ditch talks on Israel-Hamas prisoner swap

Two Israeli envoys left Cairo yesterday after last-ditch talks on a proposed prisoner exchange with the Islamist Hamas movement that controls Gaza, a source close to the talks said.

"We're very close to the moment of truth," the source said, after the 11th-hour meeting which had prompted the postponement of an emergency Israeli Cabinet meeting summoned to take the final decision.

The two envoys - special negotiator Ofer Dekel and the head of Israel's Shin Beth internal security service Yuval Diskin - met Egypt's go-between in the negotiations, intelligence chief Omar Suleiman.

Israel refuses to have any direct dealings with Hamas, which it boycotts as a terrorist organisation in common with the European Union and the United States.

There was no immediate word on the progress of the talks, which were kept under very tight wraps.

Israel is seeking the release of Gilad Shalit, a conscript seized by Gaza militants in a deadly cross-border raid in June 2006.

Hamas wants the release in exchange of hundreds of Palestinian prisoners in Israeli jails, including some convicted of attacks against Israelis in what would mark a major change in Israeli government policy.

The outgoing government of Prime Minister Ehud Olmert has warned Hamas that this is its final opportunity to strike a deal before a new, more hawkish Cabinet is formed by Prime Minister designate Benjamin Netanyahu following last month's general election.

Mr Olmert had called a cabinet meeting earlier yesterday but he postponed it at the last minute in the face of the continuing talks in Cairo.

"In light of the negotiations that are currently continuing in Cairo regarding the release of Gilad Shalit, Prime Minister Ehud Olmert decided... to postpone by 24 hours the Cabinet meeting," a statement from his office said.

"It should be emphasised that as of yet, there is no sign that indicates a result in any particular direction in the negotiations," it added.

Mr Olmert has insisted that without Mr Shalit's release, there will be no agreement on a long-term truce in and around Gaza to formally draw a line under Israel's three-week offensive against the territory at the turn of the year. Israel and Hamas separately adopted unilateral ceasefires on January 18.

Mr Shalit's prolonged captivity - now nearing its 1,000th day - has become a cause celebre in Israel and Mr Olmert is thought keen to secure the serviceman's release before he stands down.

A corporal at the time of his capture, Mr Shalit has since been promoted to staff sergeant.

His family have set up a protest camp near Mr Olmert's office to maintain the pressure on the government.