Israel has begun began the process of formally pardoning hundreds of Palestinian prisoners who are to be exchanged for an Israeli soldier held by Gaza militants for five years.

A spokeswoman for President Shimon Peres said he received the files of hundreds of prisoners set for release in the first phase of the deal and has 48 hours to sign the pardons. The swap is expected to happen on Tuesday.

Under the deal, 1,027 Palestinians - including some behind attacks on Israelis - will be released in two stages in return for Sgt Gilad Schalit, who was captured by Hamas-backed militants in a 2006 cross-border raid.

Israel has agreed to uneven prisoner exchange deals for decades. This swap, however, is the most lopsided to date.

Critics say it encourages more abductions, is unjust to families of those killed in attacks and also poses the risk that freed militants will return to violence.

The list of prisoners included in the deal was officially released publicly early today, and in a mostly symbolic gesture, Israelis will be able to raise appeals.

Among the Palestinian prisoners to be freed are many involved in plotting suicide bombings inside restaurants and buses as well as shooting attacks that killed hundreds of Israelis and injured many more.

Nasser Iteima, who was behind the bombing of a Netanya hotel on Passover eve in 2002 that killed 30 people and wounded 140, will be released, as will Walid Anjes who was jailed for orchestrating a bombing at the Moment cafe in Jerusalem that killed 11 people and maimed dozens that same year.

Israel's Channel 2 TV showed a prison interview with Ahlam Tamimi, who is expected to be released. In 2001, she transported a suicide bomber to a Sbarro restaurant in central Jerusalem, where he killed 15 people. Asked if she felt remorse, Tamimi said: "No, why should I?"

Hamas officials confirmed yesterday that among those to be released was Yehia Sanwar, one of the founders of the group's militant wing, who was sentenced to multiple life sentences.

Jihad Yaghmour, who planned and participated in the 1994 abduction and execution of Nachson Waxman, an Israeli soldier and US citizen, is also on the list, the officials said.

Little is known of Sgt Schalit's condition. Hamas banned the Red Cross from visiting him and only released a short audio and video statement not long after his capture, confirming that he was alive.

In the West Bank and Gaza, families waited in anticipation for the return of their loved ones. The prisoners are highly regarded in Palestinian society.

Hamas officials were in talks with Egyptian intelligence officers in Cairo to work out the intricate mechanics of how to safely transfer Sgt Schalit.

Hamas is eager to keep secret the location in Gaza where they have held him, no easy feat in a tiny sliver of territory crammed with 1.6 million people.

Some militants involved in hiding Sgt Schalit also said they feared Israeli forces might seize the soldier if they knew of his location before he was spirited out, a senior Hamas official said. They were also on guard for the slim possibility that other militants along the transfer route might try to harm him.

The official would not say what strategy was agreed on, only that "different scenarios" were under consideration.

The general plan is to transfer Sgt Schalit from Hamas custody to Egypt. Cairo would then hand the soldier over to Israel.

The official would not say when Schalit would be transferred to Egyptian custody or from where. He said the Israeli would not be handed over to Egyptian officials at Rafah, the only border crossing between Egypt and the Gaza Strip.

The spokesman for a smaller Palestinian militant faction also involved in Sgt Schalit's capture said the handover would involve several steps.

First, the identities of released Palestinian prisoners would be checked, said Mohammed al-Barem of the Popular Resistance Committees. Once confirmed, they would be transferred in buses to the Egyptian Sinai desert.

Once they reached the Sinai, the procedures to release Schalit would begin, he said.

"They will hand over the captive soldier simultaneously, without announcement and in secret, with strong security procedures by the factions holding (Sgt Schalit)," al-Barem said.

Once that is accomplished, the Palestinian prisoners meant to be released into Gaza would be taken to the Rafah crossing.

From there, Palestinian officials will escort them to Gaza City for a huge celebration.

Israel is expected to release around 450 Palestinian prisoners on the same day that Sgt Schalit is freed and about 550 more two months later.

Prisoners headed to the West Bank are typically left at Israeli checkpoints scattered throughout the territory. Waiting Palestinian buses ferry them back home.