A senior Egyptian source said Thursday that the third round of indirect talks between Israel and Hamas, meant to facilitate a prisoner exchange deal which would secure the release of kidnapped IDF soldier Gilad Shalit, have deadlocked.

The source, quoted by the London-based Arabic-language newspaper al-Hayat, said both sides were "digging in their heels," and that as of Thursday, no date has been set to renew the talks.

"Each party is interested in getting the best deal they can. We are still far from the point of saying that the talks have matured into a deal," the source said.

Each party, he stressed, has to "find a way to compromise on some things… We've postponed the talks for now so that each side can reexamine their position, while we take what we've learned here and carefully try to come up with new ideas and solutions, so that the parties can meet half way."

According to the newspaper's source, Egypt intends to try and broker a deal that would see hundreds of Palestinian prisoners released in exchange for Gilad Shalit.

Hamas Politburo Chief Khaled Mashaal met on Wednesday with Egyptian Intelligence Minister Murad Muwafi on the matter. According to al-Hayat, the meeting went well, and focused on several Palestinian issues, including the prisoner exchange deal.

According to the Egyptian source, Mashaal said that Hamas wanted to see a deal come to fruition: "They are determined to see this deal through and said they would try to push it forward."

Nevertheless, the source said that Mashaal and other top Hamas Politburo members do not directly intervene in the negotiations, led by Ahmed Jabari, head of Hamas' military wing.