The German mediator negotiating for the release of abducted Israel Defense Forces soldier Gilad Shalit is currently in the region attempting to push forth a prisoner swap deal with Hamas, the A-Sharq al-Awsat newspaper reported on Friday.

Citing an Israeli political source, the newspaper said that Prime Minister Benjamin Netanyahu had offered Hamas a deal accepted by the movement's political branch accepted, but rejected by its military wing.

Open gallery view IDF soldier Gilad Shalit, captured by Hamas in 2006. Credit: Archive

The schism has led Netanyahu to give up on that proposal, the source reportedly said, adding that the offer had been better than the one offered by former Prime Minister Ehud Olmert.

The source also denied Hamas' allegations that the Israeli negotiator in the case, Hagai Hadas, had resigned when he announced earlier this week that he would be leaving his post. Hadas also denied reports that he was quitting due to personal considerations and said he had set a specific time-line for his position with Netanyahu before taking on the job.

Hamas has been insistent in its demand that some 1,400 prisoners be released from Israeli jails in return for handing over the Shalit. Israel has balked at a number of the names on Hamas' list - which includes some responsible for deadly terror attacks in Israel - agreeing to free around 980 prisoners.

Negotiations have stalled numerous times. Hamas last year accused Israel of changing its stance over points to which it had already agreed. Hamas sources have said that Israel is delaying the completion of the Shalit deal by refusing to release 50 Hamas officials it holds in its jails.