Outgoing Prime Minister Ehud Olmert says Israel will not cave in to demands by "a terrorist organisation."
Outgoing Prime Minister Ehud Olmert on Tuesday rejected Hamas's terms for a prisoner swap, saying Israel would not cave in to demands by "a terrorist organisation."
Israel also stressed it would not ease its blockade of the Hamas-run Gaza Strip until a soldier held there since 2006 is freed.
"We will not accept in any manner the conditions set by Hamas," Olmert said of the proposed prisoner swap under which the Islamists would free Gilad Shalit in exchange for hundreds of Palestinian prisoners.
Israel said it agreed to release 320 of 450 Palestinians Hamas wants freed, but claimed Hamas was being intransigent.
"We have been generous in our conditions and we will not free other prisoners than those we agreed to release," Olmert told a news conference.
"In the name of the State of Israel and its government, I declare that there are red lines that we will not cross ... We will not cave in to the demands of a terrorist group."
He insisted, however, that the government would continue to seek Shalit's release, saying "we will spare no effort."
He spoke after envoys briefed the cabinet upon their return from two days of talks in Egypt, which has been mediating prisoner-swap negotiations between Israel and Hamas.
For Israel, the issue has gained in urgency as Olmert had hoped to strike a deal before he steps down and is replaced by hawkish Benjamin Netanyahu, whose cabinet is likely to assume a hardline stand.
"There will be no expansion of the opening of the Gaza crossings until they release Gilad Shalit," a senior official said after the cabinet meeting.
Israel has imposed a crippling blockade on Gaza since Hamas seized power there in June 2007, in a bid to halt rocket and mortar fire from the impoverished Palestinian enclave.
Olmert accused Hamas of hardening its stance in the Cairo negotiations.
"It became clear during the discussions that Hamas had hardened its position, reneged on understandings that had been formulated over the past year and raised extreme demands," Olmert's office said.
In turn, Hamas blamed Israel.
"Olmert is the one responsible for the failure of getting a deal ... because he wouldn't do what he had to do," said Ismail Radwan, a Hamas leader in Gaza,
Ossama Hamdan, the Hamas representative in Beirut, claimed Israel "thinks that Hamas will accept less than the bare minimum under pressure that the next Israeli government ... risks being less disposed to proceed with an exchange."
"As soon as there is a serious offer from Israel, we will deal with it," he said in a statement published on the group's website.
The heads of security services attending the cabinet meeting warned that campaigns for Shalit's release damaged the negotiations, claiming Hamas has become convinced public pressure would lead to the release of all 450 prisoners it wanted, an official said.
Olmert met Shalit's parents, who have moved into a protest tent outside his residence in Jerusalem and which is now a pilgrimage site for politicians eager to express support for the national cause celebre.
In an impassioned letter to Olmert before the cabinet met, Shalit's father Noam pleaded with him not to abandon Gilad in "Hamas's dungeons."
"I am asking you - father to father - don't abandon my son Gilad," said the letter, as quoted by Israeli media.
"Gilad was kidnapped during your tenure as PM," it said. "We demand that you bring Gilad home before the end of your term, despite the heavy price this entails."
Olmert appointed a committee headed by Justice Minister Daniel Friedman to find new ways to put pressure on Hamas, such as imposing the same conditions for Hamas prisoners in Israel as those under which Shalit is thought to be held.
Last week Olmert sent senior aide Ofer Dekel and internal security chief Yuval Diskin to Cairo to try to nail down a deal with Hamas.
The two were reportedly given wide latitude, including offering to free some prisoners involved in attacks that had killed Israelis - something the Jewish state normally refuses to do.