It is still unclear how many of the estimated 8000 Palestinians being held by Israel will be released, although Israel public radio said no prisoners "with blood on their hands" would be freed.
Walid al-Umari, Aljazeera's correspondent in Palestine, reported that 100 to 200 prisoners are expected to be released.
He said: "The procedures for freeing the Palestinian prisoners will be carried out before the end of December."
Al-Umari added that only prisoners whose sentence is about to end would be freed.
A statement issued by the Israeli prime minister's office after the release of Azzam Azzam last week said Ariel Sharon had "ordered the relevant security authorities to consider the possibility of shortening the prison terms of Palestinian prisoners in accordance with previously determined criteria".
was freed in an exchange which also saw six Egyptians accused of planning to kidnap and kill Israeli soldiers returning to their homeland.
Azzam, who served seven years of a 15-year sentence for spying charges,
Azzam served seven years in an
Egyptian jail on spying charges
Palestinian negotiations minister Saib Uraiqat, meanwhile, called for talks with Israel to reach agreement on who should be freed.
"We ask the Israeli side to hold a meeting with our minister of
prisoner affairs [Hisham Abd al-Raziq] to discuss and agree on the list of prisoners that should be released," he said.