Israel and Hamas have agreed a deal for the release of Sgt Gilad Shalit, an Israeli soldier held hostage by Palestinian militants for five years.
Prime Minister Benjamin Netanyahu said the deal had been reached after arduous talks, and that Sgt Shalit would be back with his family "within days".
Israel is likely to release hundreds of Palestinian prisoners in exchange.
Sgt Shalit was captured in a cross-border raid in 2006, and repeated attempts to free him have failed.
But Mr Netanyahu said in a national TV address: "We have concluded arduous negotiations with Hamas to release Gilad Shalit. He will be coming home in the next few days."
'Window of opportunity'
The militant group Hamas, which runs Gaza, said in a statement that there were tens of thousands of people on the streets celebrating the deal.
The group's leader Khaled Meshaal appeared on TV to hail the swap deal as a victory for the Palestinian people.
He promised to carry on working to free every Palestinian prisoner held in Israeli jails.
The BBC's Jon Donnison in Jerusalem says Sgt Shalit's family and the families of hundreds of Palestinian prisoners held in Israeli jails will not believe a deal has been done until their relatives are home.
The Israeli newspaper Haaretz quoted an unnamed official in Mr Netanyahu's office as saying that "a brief window of opportunity has been opened" that could lead to Gilad Shalit's release.
The official added: "The window appeared following fears that collapsing Mid-East regimes and the rise of extremist forces would make Gilad Shalit's return impossible."
An Israeli source involved in the talks was quoted by Reuters news agency as saying that the deal called for 1,000 Palestinians prisoners to be freed in two stages.
The first involves the release of 450 for the soldier, with the remaining 550 to be freed later.
Some of the 5,000 Palestinian prisoners held by Israel have been convicted of serious crimes, but others are being held without charge.
Israel's Channel 2 TV reported that both sides had shown greater flexibility in recent talks.
Indirect talks over 25-year-old Sgt Shalit's release - being mediated by Egypt and Germany - had focused on prisoner exchanges.
In October 2009, Hamas released a video of the soldier calling on Mr Netanyahu to do everything to free him.(1)
Despite the rhetoric of Israeli governments throughout the years, they do negotiate with 'terrorist groups'. Netanyahu has consented to negotiations with Hamas and appears to have clinched a deal to obtain release of Mr. Shalit.
If anything this shows that he is your average, pragmatic, politician. His rhetoric is that of a right wing hothead, but in reality he does compromise. Something that his hardcore supporters will no doubt be disappointed with.
Footnote:
(1) http://www.bbc.co.uk/news/world-middle-east-15267100


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