Details of negotiations for the release of Gilad Shalit, a captured Israeli soldier, are being kept under wraps for fear of jeopardising the talks. It is understood that Israel is offering to free the most notorious Palestinian convicts only if they are exiled overseas or confined to Gaza.

Ehud Barack, defence minister, said: “This is a sensitive time and it would be wrong to expound upon the topic, but we, as those who sent Gilad, feel a responsibility to make every feasible and worthy move to bring Gilad home, though not at any price.

A German mediator is due to take the Israeli response to Hamas today. Shalit has been held in Gaza since he was snatched by gunmen in 2006. Two other soldiers were killed during a cross-border raid by militants drawn from several organisations.

Israel is considering releasing about1000 Palestinian prisoners in exchange for the 23-year-old. They include Marwan Barghouti, the former Fatah leader, who is serving multiple life sentences for his role in three fatal terrorist attacks.

Expectations of a deal have grown in the past two days amid a whirlwind of activity. Seven key Israeli ministers spent Sunday and Monday locked in talks while opposition politicians have dropped a no-confidence motion in order to free the government’s time.

They are concerned about handing Hamas a propaganda victory, strengthening the Islamist movement at the expense of the more moderate Fatah party. Aluf Benn, editor at large of Haaretz newspaper, said momentum was building towards a resolution but there were still hurdles to overcome.

“The security risk is considerable. That is where the main opposition is coming from among military officials. Everybody wants Gilad Shalit home,” he said. “That’s not in question.”

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