JERUSALEM — Israel has begun implementing a ceasefire deal in Gaza, after it reached an agreement with Hamas for the Palestinian militant group to release all the hostages it holds.

It is the first diplomatic breakthrough after months of failed attempts at stopping the two-year war, which has all but devastated Gaza, left tens of thousands dead and destabilized the Middle East. The deal came after days of negotiations between the warring sides in the Egyptian resort of Sharm el-Sheikh, building on a proposal from U.S. President Donald Trump.

Israel’s Cabinet convened late Thursday to formally approve the agreement ahead of a hostage release. Once the government gives its go-ahead, troops will start withdrawing from their positions within 24 hours, Israeli Foreign Minister Gideon Sa’ar said in an interview with Fox News.

Trump said he expects hostages to be released Monday or Tuesday and that he is planning to travel to the region to mark the event. That includes a signing ceremony in Egypt.

“I think it’s going to be a lasting peace, hopefully an everlasting peace. Peace in the Middle East,” Trump said in a briefing Thursday. “Gaza is going to be slowly redone. You have tremendous wealth in that part of the world by certain countries, and just a small part of that, what they make, will do wonders for Gaza.”

President Isaac Herzog canceled an annual holiday in Israel in anticipation of a hostage release and upcoming visit by Trump, adding to the expectation a ceasefire will be sustained.

Iran-backed Hamas is set to return all of the remaining 48 hostages held in Gaza — 20 of which are believed to be alive. In return, Israel is due to release almost 2,000 jailed Palestinians and allow a ramp up of aid to Gaza through United Nations agencies and other international bodies.

Israeli forces will undergo a phased withdrawal from Gaza’s city centers until they reach a buffer zone just within the Palestinian enclave’s border.

Finance Minister Bezalel Smotrich, an ultranationalist member of Israel’s ruling coalition, said he won’t vote in favor of the deal, but stopped short of threatening to quit the government, signaling it’s likely to pass.

Earlier in the day, Israel’s deputy foreign minister, Sharren Haskel, said in an interview with Bloomberg TV a ceasefire was in effect as of Thursday.

Prime Minister Benjamin Netanyahu, whose government has long sought the total destruction of Hamas, hailed “a national and moral victory for the State of Israel.” He said he had a “very emotional and warm conversation” with Trump in which they congratulated each other on the “historic achievement.”

Hamas triggered the conflict with an attack on southern Israel on Oct. 7, 2023, killing 1,200 people and abducting another 250. More than 67,000 Gazans have been killed in the ensuing war, according to the Hamas-run health ministry. Some 450 Israeli troops have died in combat in Gaza. A panel supported by the U.N. said Israel was committing genocide, something Netanyahu’s government denies.

Under the ceasefire deal, Israel is due to allow a ramp-up of aid to the war-battered Palestinian enclave, where a humanitarian crisis led a United Nations-backed monitor to declared a famine in parts of the territory.

“We and our partners are prepared to move – now,” U.N. Secretary-General Antonio Guterres told reporters. “We have the expertise, the distribution networks, and community relationships in place to act.”

The overnight agreement and the prospects of peace boosted Israeli assets, with the shekel climbing to a three-year high on Thursday. Israel’s stock market and the country’s sovereign dollar bonds rose.

Crowds gathered in Hostage Square in Tel Aviv — a focal point for Israeli demonstrators calling for their release — to celebrate. There were also celebrations in Gaza, including in Khan Younis and Deir al-Balah, according to witnesses.

Photos from Egypt showed Israeli and Qatari negotiators embracing each other, something that would have previously been unthinkable given the tensions between the countries. Less than a month ago, Israel outraged Qatar by trying to assassinate a leading Hamas official with a missile strike on a residential compound in Doha.

The talks in Sharm el-Sheikh are likely to continue over outstanding issues, including the reconstruction and future governance of Gaza. Trump and Netanyahu have demanded that Hamas disarms and have no part in governing the territory. The group, designated a terrorist organization by the U.S., European Union and others, is yet to formally agree to that.

Still, a spokesperson signaled to Al Jazeera on Thursday that it is willing to do so.

“Hamas will not be part of the governance of Gaza, and we have shown all necessary flexibility in this regard,” he told the Qatari broadcaster on Thursday. “We are discussing approaches with the mediators to reach a ceasefire, but not on the basis of surrendering weapons.”

He called on the U.S., Egypt, Qatar and Turkey to ensure Israel sticks to the terms of the deal.

Finalizing the roster of Palestinian prisoners to be released could prove protracted. Some members of Netanyahu’s coalition, the most right-wing and religious in Israel’s history, will likely oppose the inclusion of masterminds of suicide bombings or of Palestinians who took part in the Oct. 7 attack.

International leaders, including from Germany and the U.K., welcomed the breakthrough. Many have denounced Israel’s campaign in Gaza and in some cases moved to recognize a Palestinian state in response. French President Emmanuel Macron, who has repeatedly clashed with Netanyahu over the conflict, said the “agreement must mark the end of the war and the beginning of a political solution.”

Iran, with whom Israel fought a 12-day war earlier this year, stopped short of welcoming the ceasefire deal but said it supports any initiatives aimed at ending the war, according to a statement from the ministry of foreign affairs.

“There’s plenty of reason to be skeptical here about whether this would not make it past its initial stage,” said Yousef Munayyer, head of the Palestine/Israel Program and senior fellow at the Arab Center Washington, D.C.

_____

(With assistance from Eltaf Najafizada, Fadwa Hodali, Jordan Fabian and Justin Sink.)

©2025 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.