The Palestinian Islamist organization Hamas has presented mediators with a counter-proposal for a hostage deal, in indirect negotiations in the Gaza war, the Israeli newspaper Haaretz reported.

This would only provide for the release of Israeli hostages in exchange for Palestinian prisoners from Israeli jails and a gradual withdrawal of Israeli troops from the Gaza Strip after a 42-day ceasefire, Haaretz reported on Sunday night, citing Palestinian and Arab sources.

An internally displaced Palestinian girl eats a piece of bread at a temporary camp in the southern Gaza Strip city of Rafah. 

Hamas had previously rejected a compromise proposal by the US, which envisaged the release of 40 hostages in exchange for 900 Palestinian prisoners during a six-week ceasefire.

According to Haaretz, the Hamas counter-proposal demands that the Israeli military ceases fighting in an initial six-week phase and withdraw from urban centres.

At the same time, Palestinian displaced persons would be allowed to return to the northern Gaza Strip. During this time, Hamas would search for all hostages in the embattled area and find out what condition they are in.

In a second phase, the Israeli army would have to withdraw to Israeli territory. Only then would the exchange of Israeli hostages for Palestinian prisoners begin, it was said.

For every Israeli civilian, Israel would have to release 30 Palestinian prisoners from prisons in return, it said. For every Israeli soldier, 50 Palestinians would have to be released from Israeli prisons, including 30 serving life sentences.

Israeli soldiers and dead hostages would be handed over in a third and final phase once the siege of the Gaza Strip by the Israeli army had ended and the reconstruction of the area had begun.

Israel had previously assumed that just under 100 of the approximately 130 hostages remaining in the Gaza Strip were still alive. However, it is now feared that many more may be dead.

Meanwhile three bakeries in Gaza City resumed operations on Sunday with the help of the United Nations World Food Programme (WFP).

According to eyewitness reports, thousands of people showed up to buy food shortly after the announcement was made that bread would be baked again.

Palestinian officials say that before the war there were around 140 bakeries in the Gaza Strip that supplied the majority of the population with bread.

However, since the beginning of Israel's bombardment of Gaza after the October 7 Hamas attacks on Israel, Palestinians have had to resort to baking bread in open fires and clay ovens.

Israel is under increasing pressure to allow more humanitarian aid supplies into the sealed-off strip. Aid organisations describe the situation as catastrophic and say more than a million people are at risk of starvation.

More than 33,000 people have been killed in Gaza since the outbreak of war on October 7, according to health officials in the Hamas-led region.

The head of the US Agency for International Development (USAID) believes that famine is already occurring in parts of the Gaza Strip.

The official classification of famine means that at least 20% of the population is affected by extreme food shortages. In addition, at least one in three children suffers from acute malnutrition.

Israel has moved in 'significant way' but Hamas remains barrier to Gaza hostage deal, US says

Israeli military vehicles manoeuvre, near the Israel-Gaza border.

 Israel has moved in a "significant way" but Hamas is the barrier to a deal that would see fighting in Gaza paused and hostages released, State Department spokesperson Matthew Miller said on Monday.

Hamas rejected the latest proposal for a deal and has said any new hostage deal must bring about an end to the Gaza war and withdrawal of all Israeli forces.

"Israel moved a significant way in submitting that proposal. And there was a deal on the table that would achieve much of what Hamas claims it wants to achieve, and they have not taken that deal," Miller told a press briefing.

The United States is still pursuing a deal that would allow for a ceasefire lasting at least six weeks and allow more aid into Gaza, Miller added.

Hamas and Israel exchange recriminations over stalled Gaza talks

Gaza continues to be pounded by Israeli strikes, with negotiations over a truce in Cairo stalling.

Israel and Hamas have accused each other of undermining negotiations for a truce in Gaza and a hostage release deal, although the talks have not collapsed.

On Saturday, while Hamas-backer Iran was preparing to launch hundreds of drones and missiles at Israel in retaliation for a deadly Damascus strike, the Palestinian militant group announced that it had delivered its response to the latest ceasefire proposal.

Without explicitly rejecting the draft deal, Hamas reiterated its long-standing demands for a permanent ceasefire and the full withdrawal of Israeli forces from the Gaza Strip, which Israeli officials have repeatedly opposed.

Israeli Prime Minister Benjamin Netanyahu has instead reiterated his determination to launch a ground invasion of Rafah, the last city in Gaza yet to face such a fate and which Israel insists is Hamas's last major holdout.

On Saturday, Netanyahu accused Hamas of being the "only obstacle" to a deal that would free the hostages still held by Gaza militants.

"The cabinet and the security forces are united in their opposition to these unfounded demands," he said, adding that Hamas "has refused any deal and any compromise proposal".

On Sunday, Israel's Mossad spy agency said in a statement released by Netanyahu's office that Hamas had rejected the proposal, and said it "proves" that Hamas leader Yahya Sinwar "does not want a humanitarian deal and the return of the hostages".

Sinwar was "continuing to exploit the tension with Iran", Mossad said, and was aiming for "a general escalation in the region".

The comments came just hours before Iran launched more than 300 drones and missiles at Israel, the vast majority of which intercepted according to Israel.

- 'Not at a standstill' -

Mossad said Israel would "continue to work to achieve the objectives of the war against Hamas with all its might, and will turn every stone to bring back the hostages from Gaza".

Despite the apparent gulf between the two sides, the talks, mediated by Egypt, the United States and Qatar, are ongoing in the Egyptian capital.

"The negotiations are not at a standstill" but the mediators will have to go back to the drawing board, said Hasni Abidi of CERMAM, a Geneva-based think tank specialising in the Mediterranean and the Arab world.

A framework being circulated in Cairo would halt fighting for six weeks and see the exchange of about 40 hostages for hundreds of Palestinian prisoners, as well as more aid deliveries into the besieged Gaza Strip.

A Hamas source told AFP that, ultimately, later stages of the ceasefire would see all hostages released, Israel withdrawing all its forces from Gaza, the lifting of the siege and the reconstruction of the territory.

However, so far every attempt to negotiate a durable ceasefire in the six-month-long war has failed.

In November, a seven-day truce enabled the exchange of 80 hostages for 240 Palestinian prisoners, as well as 25 captives freed outside of the truce mechanism.

The war broke out with Hamas's October 7 attack on southern Israel, which resulted in the deaths of 1,170 people, mostly civilians, according to Israeli figures.

Israel's retaliatory attack, aimed at destroying Hamas, has killed at least 33,729 people, mostly women and children, according to the health ministry in the Hamas-run territory.

Palestinian militants also took about 250 hostages, 129 of whom remain in Gaza, including 34 the Israeli army says are dead.

Israel withdrew most of its troops from the Gaza Strip on the six-month anniversary of the war, leaving only a single brigade in central Gaza, while continuing to launch air strikes and bombardments.

Netanyahu has repeated his determination to launch a ground invasion of Rafah, where around 1.5 million Gazans are sheltering from the war, despite opposition from Israel's top ally the United States.

He also faces increasing pressure from the Israeli public and the families of the hostages, with mass weekly demonstrations in Tel Aviv and Jerusalem demanding an end to his government and the return of the captives.

Hamas demands written commitment that Israel will withdraw from Gaza

Hamas has demanded a “clear written commitment” that Israel will withdraw from the Gaza Strip during the second of a three-phase cease-fire deal, a senior Egyptian official and a Hamas official said Sunday.

The Palestinian militant group said Saturday it submitted its response to a six-week cease-fire proposal to Egyptian and Qatari mediators. It said it’s still committed to its demands for a permanent cease-fire, Israeli army withdrawal from all parts of Gaza, the return of displaced people to their homes, intensifying the flow of aid and the start of reconstruction.

“We confirm our readiness to reach a deal regarding a serious exchange of prisoners between the two sides,” Hamas said.

Israel said earlier Sunday that Hamas had rejected the latest proposal for a deal submitted last week.

The proposal presented to both sides calls for a six-week cease-fire in Gaza, during which Hamas would release 40 of the more than 100 hostages the group is holding in the enclave in exchange for 900 Palestinian prisoners from Israeli jails, including 100 serving long sentences for serious crimes.

The Egyptian official said Hamas wants “a comprehensive, phased deal” that included ending the war, Israel’s withdrawal from Gaza and an agreement of all hostages in return for a large number of Palestinian prisoners. Israel says it wants to destroy Hamas’ military and governing capabilities.

The officials said the response also included an increase in the number of Palestinian prisoners Hamas wants released from Israel.

The officials from Egypt and Hamas spoke on condition of anonymity because they weren’t authorized to disclose details from the sensitive negotiations. They said that Hamas’ response included the unrestricted return of displaced Palestinians in northern Gaza through the two main south-north thoroughfares.

The Egyptian official said mediators will carefully review the response before calling for another round of talks.

Hamas rejects latest Gaza truce proposal, demands permanent ceasefire

A statement from Israeli intelligence agency Mossad said ''The rejection of the proposal by the three mediators, which included the most significant flexibility on Israel's part, proves that (Yahya) Sinwar does not want a humanitarian deal and the return of the hostages, is continuing to exploit the tension with Iran, and is striving to unite the sectors and achieve a general escalation in the region.''

The statement was published on the Prime Minister's Office web page. Yahya Sinwar is the highest-ranking Hamas official in Gaza and the territory's de facto ruler.

The statement also said Israel would continue to strive to realise ''the objectives of the war with Hamas with full force, and leave no stone unturned to return the 133 hostages from Gaza forthwith.''

Israel's frequent bombardment of the strip has decimated homes and businesses across the territory, and displaced around 1.9 million Palestinians, according to the UN.

Many who have been sheltering in central Gaza are defying the Israeli military's repeated warning not to go to their homes in the north of the strip, telling them it remains a war zone.

Video captured by the Associated Press on Sunday showed dozens of displaced families heading north through the coastal Rashid road, one of the two main thoroughfares linking southern Gaza to the north. The majority were on their feet, while others took donkey carts.

Displaced Palestinian Hanaa Abu Humaeidan from Jabaliya said her life in central Gaza has been ''very miserable''.

''All the necessities of life are non-existent in this area, and of course we are deprived of our children, our husbands, and our families. We are deprived of all the pleasures of life, and we are trying, at the risk of ourselves, to return to the places we were in before and meet our families and children who remained there and to meet our loved ones.''

Areej Abu Ouda wants to return home to the Shati refugee camp, also located in the north.

''We want our homes. We want our lives. We want to return, whether with a truce or without a truce. We want to return. It's enough. We are bored and tired.''

Northern Gaza, including Gaza City, was the first target of Israel's operation against Hamas.

The Israeli military has sealed off the northern half of the strip and forced hundreds of thousands of Palestinians to leave their homes and head to Gaza’s southern parts.

In its efforts to ''eradicate'' Hamas, the Gaza health ministry said Israeli troops have killed at least 33,729 Palestinians.

Israel's army (IDF) said it has killed as many as 13,000 Hamas fighters and allies.

The conflict was triggered when Hamas invaded Israel on 7 October and killed 1,139 Israelis and foreigners. The gunmen also kidnapped 253 Israelis and foreigners, some of whom have died in Gaza or been freed.