The threat of renewed fighting in Gaza loomed on Wednesday as the clock ticked toward the end of a three-day cease-fire with no sign of a breakthrough in indirect talks in Cairo between Israel and the Palestinians.

A Palestinian official with knowledge of the negotiations said Egypt had presented a new proposal for a permanent truce agreement that addressed a major Palestinian demand for a lifting of the Israeli and Egyptian blockades of the Gaza Strip.

Israel and Egypt harbor deep security concerns about Hamas, the dominant Islamist group in the small, Mediterranean coastal enclave, complicating any deal on easing border restrictions.

It was unclear from the official's remarks how those worries, along with Israel's demand for Gaza's demilitarization, would be dealt with. Hamas spokesman Sami Abu Zuhri said disarming was not an option.

Israeli negotiators returned to Egypt after overnight in Israel with the truce in the month-old hostilities due to expire at 12 a.m. Thursday.

Palestinian delegates and Egyptian intelligence officials reconvened for talks that could go down to the wire.

Azzam Ahmed, an official of the mainstream Fatah party who heads the Palestinian team in Cairo, said the negotiations were at a very sensitive stage and it hoped to reach a cease-fire agreement before the current truce runs out.

Egyptian and Palestinian sources said Israel had tentatively agreed to allow some supplies into the Gaza Strip and relax curbs on the cross-border movement of people and goods, subject to certain conditions. They did not elaborate, and in Israel, officials remained silent on the state of the talks.

A Palestinian demand for a Gaza seaport and reconstruction of an airport destroyed in previous conflicts with Israel has also been a stumbling block, with the Jewish state citing security reasons for opposing their operation.

But the Palestinian official said Egypt had proposed that a discussion of that issue be delayed for a month after the long-term cease-fire deal takes hold.

The Cairo talks are being under the auspices of Egypt’s General Intelligence Service, with the Israeli team shuttling back and forth between Cairo and Jerusalem.

On Tuesday, the outlook still did not look bright for the prospects of an extended truce. "We are facing difficult negotiations. The first truce passed without notable achievements. This is the second and final cease-fire," Palestinian news agency Ma'an quoted Mousa Abu Marzouk as saying

Israeli officials unable or unwilling to predict whether it will be extended or the fighting will start anew.

Prime Minister Binyamin Netanyahu cancelled a security-cabinet that was scheduled for Tuesday after it became apparent that there had been no progress in the Cairo talks on Monday, and there was no need for any decisions to be taken. Rather than hold the security cabinet meeting, Netanyahu briefed the heads of his coalition partners in the afternoon.

One diplomatic official said that Israel hoped that the cease-fire would be extended, but that Hamas was the “wild card” and it was not clear how they would react.

Diplomatic officials said that all the options were on the table, and that three scenarios were being taken into consideration: that a longer-term cease fire is agreed upon by midnight; that another 72-hour cease-fire is declared during which negotiations continue on a longer deal; that the cease-fire ends and Hamas again begins rocketing Israeli towns.

Herb Keinon contributed to this report.

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