Hamas has narrowed gaps with Israel over a longer-term truce for the Gaza Strip and could begin implementing a deal within days, Hamas officials said on Monday.
Egyptian-sponsored negotiations in Cairo have grown increasingly intense ahead of an Israeli election on Tuesday.
Senior Hamas leader Osama al-Muzaini told Reuters an 18-month ceasefire could be declared in "a few days", though he offered no details on how it would be implemented.
Earlier in Paris, Egyptian President Hosni Mubarak said the truce could begin next week.
Western and Palestinian officials said gaps between Israel and Hamas have narrowed on several issues, including the establishment of a 300-metre wide buffer zone along Gaza's border with Israel. Militants would be barred from entering it.
Aides to outgoing Israeli Prime Minister Ehud Olmert declined to comment.
Egypt has proposed a staged process beginning with a ceasefire declaration, a deal to exchange prisoners, the opening of Gaza's border crossings and reconciliation talks between rival Palestinian factions.
If finalised, it would take the place of a shaky Jan. 18 truce that ended Israel's 22-day military offensive in the Hamas-ruled Gaza Strip.
Hamas and Israel declared separate ceasefires on Jan. 18 but acts of Israeli air attacks and Palestinian responses have continued.
Israel launched on Dec. 27 a massive offensive in Gaza, killing more than 1300 Palestinians, a third of them children, and wounded at least 5300.
Sticking points could hold up agreement.
Israeli and Palestinian officials have sent mixed signals about the status of prisoner swap talks, which would intensify after the proposed ceasefire takes hold.
Hamas has demanded that Israel free 1,400 Palestinian prisoners in exchange for Gilad Shalit, an Israeli soldier captured by Gaza militants in a cross-border raid in 2006. Diplomats said Israel was likely to free closer to 1,000.
Lifting Siege on the enclave
Under the deal, Israel would open border crossings with the Gaza Strip, but it was unclear how soon and under what conditions. Olmert has hinged a full opening of the crossings on Shalit's release and has refused to offer Hamas guarantees that the passages will stay open.
Another major sticking point in the talks has been Israel's siege on certain materials for reconstruction of destroyed Gaza by Israeli bombings and also include chemicals for agriculture.
Hamas officials say they have demanded details about what would be excluded from entering the impoverished enclave, which will require massive amounts of steel, cement and other commercial goods to rebuild after the war. But Egypt and Israel have balked at Hamas demands that the terms be put in writing.
Gazans live under heavy Israel siege for a long time and Egypt still insists on not to opening the only Gaza border crossing in a move condemned by Muslims around the world in protests, leaving Gazans desperate to digging tunnels underground and risking their lives.
As part of the deal, Egypt would open the Rafah border crossings with Gaza under the auspices of international monitors and border guards who would report to Western-backed Palestinian President Mahmoud Abbas, Hamas's rival.