The successful swap is the latest indication that the fragile ceasefire signed between the two sides last month, which teetered on the brink of collapse earlier in the week, is set to hold.
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Hundreds of Palestinian prisoners were released by Israel on Saturday in the latest exchange for hostages captured by Hamas, as the fragile ceasefire held after a standoff over aid deliveries.
Three Israeli hostages were freed in exchange for the prisoners.
Israel view the prisoners being released as terrorists, while Palestinians view them as freedom fighters resisting a decades long Israeli military occupation.
Nearly every Palestinian has a friend or family member who has been jailed by Israel, for militant attacks or lesser offenses such as rock-throwing, protesting or membership in a banned political group.
Some of the released prisoners had been incarcerated for months or even years without trial – in what is known as “administrative detention.”
Among those released on Saturday, 36 had been sentenced to life for their involvement in deadly attacks against Israelis.
Only 12 of them have been allowed to return to their homes in the occupied West Bank and east Jerusalem, where their families and supporters mobbed the Red Cross minibus, chanting “God is greatest” and cheering.
Four were taken straight to hospital for urgent care, according to Palestinian medics.
As part of the deal, the 24 others with life sentences will be sent to exile.
The remaining 333 had been detained from the Gaza Strip after the 7 October 2023 attack by Hamas and during Israel's subsequent invasion of the enclave.
The mother of released prisoner Hassan Awis said she now feels alive again after reuniting with her son on Saturday.
"When I saw my son, my soul came back to me again," she said.
The two sides have now carried out six exchanges since the ceasefire began on 19 January, with 24 hostages and over 1,000 Palestinian prisoners freed so far during the first phase of the truce.
The war could resume if no agreement is reached on the more complicated second phase, which calls for the return of all remaining hostages captured in the Hamas attack on 7 October 2023 and an indefinite extension of the truce.