Israel 'ready to continue to phase two' of ceasefire

Foreign Minister Gideon Saar says Israel is ready to proceed to the second phase of the Gaza Strip ceasefire deal, as long as Hamas is ready to release more of the 59 hostages it is still holding.

Fighting in the Gaza Strip has been halted since January 19 under a truce arranged with US support and Qatari and Egyptian mediators, and Hamas has exchanged 33 Israeli hostages and five Thai citizens for about 2000 Palestinian prisoners and detainees.

But the initial 42-day truce has expired and Hamas and Israel, which has blocked the entry of aid trucks into the enclave, remain far apart on broader issues including the post-war governance of the Gaza Strip and the future of Hamas itself.

"We are ready to continue to phase two," Saar told reporters in Jerusalem as Arab leaders prepared to meet in Cairo to discuss a plan for ending the war permanently.

"But in order to extend the time or the framework, we need an agreement to release more hostages."

Hamas says it wants to move ahead to the second phase negotiations that could open the way to a permanent end to the war with the full withdrawal of Israeli forces from the devastated Palestinian enclave and a return of the remaining 59 hostages taken in the Hamas-led attack on Israel on October 7, 2023.

But Israel says its hostages must be handed over for the truce to be extended and backs a plan to extend the ceasefire during the Muslim fasting month of Ramadan, which began on Saturday, until after the Jewish Passover holiday in April.

US President Donald Trump's special Mideast envoy Steve Witkoff is due to visit the region in the next few days to discuss extending the ceasefire or moving ahead on phase two, the State Department said on Monday.

Saar denied that Israel had breached the agreement by not moving ahead to stage two negotiations.

He said there was "no automaticity" between the stages and he said Hamas had itself violated the agreement to allow aid into the Gaza Strip by seizing most of the supplies itself.

"It is a means to continue the war against Israel. It's today the major part of Hamas income in Gaza," he said.

Aid groups have said that looting and wrongful seizure of aid trucks into the Gaza Strip has been a major problem but Hamas, the Islamist militant group that seized power in the enclave in 2007, denies seizing aid for its own members.

Saar declined to comment on an Israeli media report that Israel had set a 10-day deadline to reach an agreement or resume fighting, but said: "If we want to do it, we will do it".

Egypt was expected to present a reconstruction plan for the Gaza Strip to Arab leaders in Cairo on Tuesday that would cost $US53 billion ($A85 billion) over five years and avoid resettling Palestinians, in contrast to US President Donald Trump's idea of developing a "Middle East Riviera," according to a copy of the plan seen by Reuters.

It was unclear if Egyptian officials would also be presenting the political plan at Tuesday's summit.

Egypt's reconstruction plan did not specify who would fund the reconstruction of an enclave that has been reduced to rubble.

Any proposal would require heavy buy-in from oil-rich Gulf Arab countries such as the United Arab Emirates and Saudi Arabia, who have the billions of dollars needed.

The UAE, which views Hamas as an existential threat, wants an immediate and complete disarmament of the Palestinian militant group while other Arab countries advocate a gradual approach, a source close to the matter said.

Hamas, founded in 1987 by Egypt's Muslim Brotherhood during the first Palestinian Intifada, or uprising, has said it rejects any solution imposed on the Gaza Strip by outsiders.