The 16 resistance fighters, along with their wives and children, were being processed through the Erez border crossing from Gaza into Israel.
Aljazeera correspondent Shirin Abu Akla who witnessed the border crossing at Erez reported that 51 Palestinians in total were returning home.
"The deportees - along with their families - who were allowed to return were administrative detainees in Israeli prisons accused of being involved in operations against Israel," she said.
The detainees are expected to be transferred by the Israeli military to the Beitunia checkpoint near the West Bank town of Ram Allah, once they arrive.
"I am very happy because I will be seeing my family for the first time in more than two years," said 40-year-old Mustafa Abid, a teacher originally from the Nablus region of the northern West Bank.
"I've made a lot of good friends in Gaza. I have now got another family here," added Abid whose wife and six children followed him to Gaza after his deportation.
Nasir Salama, another of the group heading to the West Bank, said that while he was happy to return he wanted all those deported from their homes to be allowed back as soon as possible.
"Of course I am very happy to be going home but I cannot be completely happy until everyone returns," he said.
An Israeli army statement said the "assigned residence orders to 16 Palestinians who were involved in terrorist activity against Israeli targets" had been rescinded "in light of the ongoing cooperation with the Palestinian Authority".
Church of Nativity
Israel is due to allow the return of 20 other Palestinians expelled to Gaza in 2002 following the siege of the Church of the Nativity in the southern West Bank town of Bethlehem, Defence Minister Shaul Mofaz has said.
"Deportees from al-Mahad Church [Church of the Nativity] are still waiting for Israel to allow them to return. The Palestinian side has said negotiations are under way and according to Israel's pledges, they should be allowed to return", Aljazeera's journalist said.
Palestinians involved in a 2002
seige will return home also
"Israel, on the other hand, has already said that the return of the al-Mahad Church's deportees is related to the handing over of security in the town of Bethlehem to Palestinians which will be studied later," she added.
Another 13 people involved in the siege were exiled to Europe, but there was no clear word from Israel on whether they would also be permitted to return.
The army also said that 600 Palestinian labourers and 300 traders from Gaza would be allowed to work in Israel starting on Sunday.
Another 100 Palestinians have been authorised to work in the Erez industrial zone, it said.
The steps were part of measures pressured on the Israelis to ease living conditions for the Palestinian population in a bid to strengthen the position of newly elected Palestinian president Mahmud Abbas.
Abbas and Israeli Prime Minister Ariel Sharon both pledged to draw a line under more than four years of violence at a landmark Middle East peace summit in the Egyptian resort of Sharm al-Shaikh on 8 February.