The initial release would include Israeli women, children, elderly, and ill hostages in exchange for 700-1,000 Palestinians held in Israeli prisons, Hamas said. 

Israeli Prime Minister Benjamin Netanyahu's office responded on Thursday that Hamas’ proposal was still based on "unrealistic demands", adding that an update on the issue would be handed out to Israel’s security cabinet on Friday. 

Ceasefire negotiations had faltered over the past few weeks, Hamas said, citing Netanyahu’s rejection of its demands, which include a permanent truce, Israeli withdrawal from the Strip, the return of the displaced in the south of Gaza to the centre and the north, and more aid without restrictions.

Many warned of a possible assault on Rafah by Israel on its border with Egypt, where most of the displaced have sought shelter.

With the conflict now in its sixth month, the United Nations has warned that at least 576,000 people in Gaza are on the brink of famine and global pressure has been growing on Israel to allow more access for aid.