Benyamin Netanyahu, leader of the Likud party and tipped to be the next Israeli prime minister, is being briefed on the truce negotiations.

Under Israeli election rules, the party leader deemed most likely to form a working coalition is appointed prime minister rather than the election winner.

However, just one day earlier, Olmert's office had released another statement promising: "Israel will not reach any understandings regarding the calm [truce] before the release of Gilad Shalit."

Shalit was seized by Palestinian fighters in a cross-border raid in 2006.

'Political brinkmanship'

Hamas, which seized full control of the Gaza Strip in June 2007 after pushing out security forces loyal to Mahmoud Abbas, the Palestinian president, said that Israel had raised the Shalit issue in order to make efforts at a truce fail.

"We consider that this kind of Israeli procrastination is for the aim of achieving more objectives and wasting more time and effort," Osama Hamdan, a Beirut-based Hamas official, said.

"Olmert wants to end his term on a photo opportunity with Gilad Shalit back home and and maybe that will save some of his legacy"

Akiva Eldar, chief political analyst, Ha'aretz

"But our position is still as it was, and what was agreed has to be implemented fully. Otherwise Israel will bear the consequences of any failure."

Egypt has been attempting to broker a lasting truce between the two sides since Israel ended its 22-day assault on the Gaza Strip, which left more than 1,300 Palestinians dead.

Israel unilaterally decided to halt the offensive on January 18, before Hamas announced its own ceasefire the following day. 

There had been media reports in recent days suggesting that the two sides were close to a deal after Egyptian officials said that a truce could be agreed "in days".

Jacky Rowland, Al Jazeera's correspondent in Jerusalem, said that Israeli public opinion overwhelmingly backed the idea of Shalit's release being tied to any ceasefire deal.

"I think the Israelis at the moment are hoping that the grim reality of post-war Gaza is beginning to dawn on Hamas," she said.

"The Israelis are figuring that Hamas, apart from Gilad Shalit, doesn't hold many cards."

However, with a new Israeli government expected to be sworn in within weeks, Olmert would be keen to complete a deal before he leaves office, Rowland said.

Hamas could also be keen to secure a truce, fearing any new Israeli government will be dominated by hardliners.

Crossings demand

Hamas has previously said that negotiations over Shalit's release should take place as part of separate talks on a possible exchange for hundreds of Palestinian prisoners held in Israeli jails.

Akiva Eldar, chief political analyst for the Ha'aretz newspaper, told Al Jazeera that Olmert would also seek to share the responsibility for the terms of and truce, as well as the credit if Shalit was released.

Shalit was captured in a cross-border raid by Palestinian fighters in 2006 [EPA]

"It seems that the Israeli public is willing to pay a very high price for Gilad Shalit," Edlar said.

"I believe Olmert wants to end his term on a photo opportunity with Gilad Shalit back home and and maybe that will save some of his legacy after the 2006 Lebanon war and the corruption effort [allegations]."

Al Jazeera's Lauren Taylor, reporting from the Egyptian capital Cairo, said: "Hamas are saying ... in terms of that truce deal, the opening of the borders and the ceasefire, they are ready to sign.

"They are saying that Israel bringing up the issue of Gilad Shalit at this stage is effectively Israel throwing a spanner in the works."

The Palestinians want the crossings into the Gaza Strip reopened as part of a truce deal to bring to an end the crippling blockade of the territory that has restricted the delivery of basic supplies, food and fuel.

Israel launched its offensive on Gaza with the stated aim of stopping rocket attacks on southern Israel and destroying the infrastructure of the Hamas government.

Despite both sides declaring ceasefires, dozens of rockets and mortars have been fired by Palestinian fighters and Israel has carried out a number of air raids.