The agreement, to be signed Thursday, also calls for Israel to release hundreds of Palestinian prisoners as well as prompt a surge of aid into Gaza after more than two years of war started by Hamas's unprecedented October 2023 attack on Israel. 

Palestinian militant group Hamas is to release all hostages while Israel would pull its troops back to an agreed on line, US President Donald Trump said after talks in Egypt on his 20-point peace plan resulted in a deal.

A source within Hamas told AFP the group will exchange 20 living hostages all at the same time for nearly 2,000 Palestinian prisoners as part of the deal's first phase, with the swap to happen within 72 hours of its implementation.

Trump said he believed all the hostages would "all be coming back on Monday", adding that Washington will play a role in helping rebuild war-torn Gaza as well as keeping it safe and peaceful.

"Honestly, when I heard the news, I couldn't hold back. Tears of joy flowed. Two years of bombing, terror, destruction, loss, humiliation, and the constant feeling that we could die at any moment," displaced Gazan Samer Joudeh told AFP.

"Now, we finally feel like we're getting a moment of respite," he added.

Qatar said the deal was the "first phase of the Gaza ceasefire agreement, which will lead to ending the war, the release of Israeli hostages and Palestinian prisoners, and the entry of aid".

The hostages are to be freed in exchange for 250 Palestinians sentenced to life imprisonment and 1,700 others arrested by Israel since the war began, added source within Hamas.

Israeli Prime Minister Benjamin Netanyahu said he would bring the hostages home "with God's help", and an official source added the premier's cabinet would meet Thursday to approve the deal.

Trump said earlier that he may travel to the Middle East this week as a deal was "very close".

The fast-paced developments came after AFP journalists saw US Secretary of State Marco Rubio interrupt an event at the White House on Wednesday and hand Trump an urgent note about the progress of the negotiations in Egypt.

"I may go there sometime toward the end of the week, maybe on Sunday," Trump said, adding that he was "most likely" to turn up in Egypt but would also consider going to war-torn Gaza.

Trump's plan called for a ceasefire, the release of all the hostages held in Gaza, Hamas's disarmament and a gradual Israeli withdrawal from the territory.

Hamas had submitted a list of Palestinian prisoners it wants released from Israeli jails in the first phase of the truce.

In exchange, Hamas is set to free the remaining 47 hostages, both alive and dead, who were seized in its October 7, 2023 attack on Israel which sparked the war.

Hamas said it would be joined by delegations from Islamic Jihad -- which has also held some of the hostages in Gaza -- as well as the Popular Front for the Liberation of Palestine.

The negotiations were taking place under the shadow of the second anniversary of the Hamas attack on Israel, which resulted in the deaths of 1,219 people, mostly civilians, according to an AFP tally based on official Israeli figures.

Militants also took 251 people hostage into Gaza, where 47 remain, including 25 the Israeli military says are dead.

Israel's military campaign in Gaza has killed at least 67,183 people, according to the health ministry in the Hamas-run territory, figures the United Nations considers credible.

The data does not distinguish between civilians and combatants but indicates that more than half of the dead are women and children.

The territory's civil defense agency, a rescue force operating under Hamas's authority, said the bombardment of Gaza had not stopped in the hours before the deal. An AFP journalist in Israel near the Gaza border reported hearing multiple explosions in the morning.

Global pressure to end the war has escalated, with much of Gaza flattened, a UN-declared famine unfolding and Israeli hostage families still longing for their loved ones' return.

One key to the negotiations was the names of the Palestinian prisoners Hamas pushed for.

High-profile inmate Marwan Barghouti -- from Hamas's rival, the Fatah movement -- is among those the group wanted to see released, according to Egyptian state-linked media. 

Hamas's top negotiator, Khalil al-Hayya, also said the Islamist group wants "guarantees from President Trump and the sponsor countries that the war will end once and for all".