Prime Minister Benjamin Netanyahu announced tonight that Israel and Hamas have agreed to an historic prisoner swap deal that will release Sgt. Gilad Shalit, who has been held for five years in the Gaza Strip, in return for some 1,000 Palestinian prisoners.

After thanking the Egyptian government for mediating the deal, Mr. Netanyahu said that if everything goes according to plan, Mr. Shalit would return home in the coming days.

"Today I am bringing the cabinet a proposal that will bring Gilad home healthy and in one piece," he said.

The diplomatic breakthrough gives a much needed boost to Hamas, Egypt, and Mr. Netanyahu, all of whom have been struggling of late amid the regional changes prompted by the so-called Arab Spring.

How the deal helps Israel, Hamas

The Israeli prime minister is likely to get a boost in popular support for releasing a soldier who has become a nationwide celebrity since being kidnapped from the Gaza border in June 2006. In addition, he was likely keen to boost ties with Cairo by collaborating on the prisoner deal, analysts say. Relations had grown chilly after a terrorist attack on the Israel-Egyptian border in August, and the storming of Israel's embassy in Cairo by a mob of Egyptians.

Gerald Steinberg, a political science professor at Bar Ilan University, says Israel wanted to shore up Egypt's interim military rulers as a counterweight to the growing efforts of Turkey to gain regional prominence.

"The goal is to help stabilize [Cairo], so they play a constructive role" in the region, Mr. Steinberg says. "It’s to show to other countries" that Egypt is still a regional power after this year's revolution.

Hamas has been struggling recently because of the revolt in Syria against its strategic and political patron, President Bashar al-Assad. The release of hundreds of convicted militants will give the Islamist militant rulers of Gaza newfound prestige among Palestinians in its rivalry with the Western-backed government of President Mahmoud Abbas.

In a televised address, Hamas leader Khaled Meshaal said that the release of Palestinian prisoners would be carried out in two stages: 450 prisoners within a week, and the remainder within two months. Calling the deal a "huge national achievement," Meshaal said the deal would include some 315 prisoners serving life sentences in Israel.

The identity of the prisoners to be included in the deal remains unclear.

Key deal for Netanyahu, but hard to implement

The agreement is the culmination of five years of on-and-off negotiations. Twice since Shalit’s imprisonment – at the end of the term of former Prime Minister Ehud Olmert and nearly two years ago – a deal seemed close, but fell through.

Israel’s Haaretz newspaper, describing a closing window of opportunity, speculated that the government believes that the uncertainty created by the Arab Srping was liable to destabilize regional governments in the future and further complicate the deal. After the announcement of the deal, activists campaigning for Shalit's release embraced each other in an encampment outside the prime minister's office in Jerusalem, where Shalit's parents have camped out for more than a year.

Steinberg says that the deal would be painful for Netanyahu, stirring up protests by Israeli families whose relatives have been killed or injured in terrorist attacks during the Palestinian intifada. He suggests that the agreement was also done with an eye toward Israeli parliamentary elections, which could come as early as next year.

"Netanyahu needed to show that he could pull the deal off, and not leave us hanging," he said. "This sort of agreement is going to be difficult to implement, there’s going to be a lot of opposition."