Israel delivered significant concessions to end a mass hunger strike by around 2,000 Palestinian prisoners on Monday, in a deal that was hailed as a victory by Palestinian leaders on the eve of the most symbolic day in their calendar.

Under the agreement, which was signed following mediation by Egypt and Jordan, Israel will end solitary confinement for all prisoners and allow around 400 prisoners from Gaza to receive family visits. It agreed to discuss improvements to prison conditions, such as access to televisions and telephone calls.

Prisoners on administrative detention orders – Israel's term for imprisonment without charge or trial, the key issue behind the hunger strike – will not have their terms renewed without fresh information or evidence being brought before a military judge.

In return, Palestinian prisoners' leaders have "signed a commitment to completely halt terrorist activity inside Israeli prisons", including recruitment, practical support, funding and co-ordination of operations, according to a statement released by the Israeli security agency, Shin Bet.

An Israeli government official acknowledged that Israel had "gone the extra mile" in agreeing the terms to end the protest, but added the deal was intended to be an "inducement" to the Palestinian leadership to return to peace talks.

Veteran Palestinian politician Hanan Ashrawi applauded the deal. "The hunger strikers' courage is magnificently inspiring, and their selflessness deeply humbling. They have truly demonstrated that non-violent resistance is an essential tool in our struggle for freedom," she said in a statement.

Mark Regev, a spokesman for the Israeli government, said: "In response to a request by [the Palestinian president, Mahmoud Abbas], Israel has negotiated the end of the strike. It is our hope that this gesture by Israel will serve to build confidence between the parties and further peace."

The deal comes a week after the realignment of the Israeli coalition government towards the political centre, which has prompted speculation that Israel's prime minister, Binyamin Netanyahu, may be more open to serious peace talks with the Palestinians. The record of his government for the past three years has been to talk about negotiations without making any recent gestures to advance them. The agreement to end the hunger strike was cast by Israeli officials as a confidence-building gesture.

Around 2,500 prisoners joined the hunger strike after it began as a mass protest on 17 April, according to Palestinian human rights groups. A handful of prisoners had been refusing food for a longer period. Two, who had been on hunger strike for 77 days, were believed to be close to death, and six others were in a critical condition.

The IPS said that 1,550 prisoners were taking part in the protest under medical supervision, and that no life had been in danger.

The hunger strike sparked widespread sympathy protests and demonstrations across the West Bank and Gaza among a population in which most families have direct experience of imprisonment.

Abbas had warned that solidarity action could spiral out of control in the event of a prisoner's death, and Tony Blair, the former British prime minister who is now envoy for the Middle East Quartet, warned of "serious implications for stability and security conditions on the ground".

Without a deal it was feared that protests would escalate on Nakba Day on Tuesday, when Palestinians mourn the loss of their land in 1948.

The two prisoners who had refused food for the longest period, Tha'er Halahleh and Bilal Diab, have been imprisoned for 23 months and nine months respectively on administrative detention orders. Both are members of Islamic Jihad.

United Nations secretary-general Ban Ki-moon had called on Israel to either put administrative detainees on trial or release them.

The maximum period of administrative detention is six months, but that can be renewed indefinitely by a military judge. Under the terms of Monday's deal Israel has agreed that such detentions will not be extended without the submission of additional intelligence. However, all evidence will continue to be secret.

The first prisoner to embark on hunger strike in the current round of protest was Islamic Jihad member Khader Adnan, who was released almost a month ago after 66 days of refusing food.

The hunger strike was one of the biggest prisoners' protests staged by Palestinians.