President Shimon Peres accused Hamas on Wednesday of holding up a deal for the release of Gilad Shalit, amid reports that talks have hit a snag over 50 prisoners whom Israel refuses to free in return for the abducted Israeli soldier.

"The delay is not caused by the Israeli government but rather by the other side - there are internal disagreements within Hamas," Army Radio quoted Peres as saying in speech to students at Kibbutz Yotveta.

"If Hamas returns to its original demands, which are already very high, we will see Gilad Shalit return home." Peres added that if Israel does reach the deal with Hamas, he would have to pardon numerous Palestinian prisoners, according to Army Radio. The president was also quoted as saying he is "encouraging" the negotiations, and is aiding the government on the issue.

"I am convinced that the government is doing everything it can to bring about the release of Gilad Shalit," he was quoted as saying.

Also on Wednesday, the London-based pan-Arab daily newspaper Al-Hayat reported that Israel is ready to contemplate the release of jailed Fatah leader Marwan Barghouti as part of the prisoner swap.

Barghouti is the former leader of the Fatah-affiliated Tanzim militia who was convicted for the murder of five Israelis during the second intifada.

The newspaper reported that the government would condition Barghouti's release on his expulsion from the West Bank.

According to the report, the German mediator involved in the negotiations between Israel and Hamas will propose that Israel reduce the number of prisoners it will demand be relocated from the West Bank in the event of any deal.

The mediator will also propose that Israel release a number of Palestinian leaders currently serving sentences in jail, Al-Hayat reported on Wednesday.

Meanwhile, Al-Hayat reported on Monday that Israel would free 17 prisoners from East Jerusalem as part of the deal with Hamas.

Ten of those prisoners will be exiled once released, according to the report.

The differences between Israel and Hamas reportedly hinges on 50 prisoners, among a list of 450 names, which Israel refuses to free.

Al-Hayyat reported on Monday that Israel is also not prepared to release five women prisoners who were sentenced to life terms.