Israel is willing to release a fourth batch of convicted Arab terrorists, but not if the Palestinians say they will end the negotiations directly after the release, a highly placed Israeli official said Saturday night.The official, familiar with the negotiations, said “Israel wants to see the continuation of the peace talks with the Palestinians, and is willing to implement the fourth release of convicted terrorists. But the Palestinians are making that very difficult when they say that immediately following the release, they will end the talks.”The official’s comments came as the eight-month negotiations faced its biggest crisis, with Israel missing the Saturday night deadline for releasing the last batch of Palestinian prisoners, as efforts by US Secretary of State John Kerry have stalled to draw up a framework for continuing the talks. In order to move back to the negotiating table, Israel agreed in July to release 104 terrorists convicted of crimes before the 1993 Oslo Accords in four tranches of 26 prisoners each. In return, the Palestinians agreed not to pursue unilateral diplomatic actions in international forums, such as taking Israel to the International Criminal Court. Israel has so far released 78 prisoners.Israel’s failure to release a final batch of Palestinian prisoners amounts to a violation of the terms of the original agreement, US officials have told their Israeli counterparts.US sources told The Jerusalem Post they fear the consequences of this inaction.An Israeli official said that the Palestinians also did not live up to their commitments under the framework, including to engage in negotiations seriously and in good faith.The official said that the release of the first three tranches of prisoners was “not easy,” and that Israel would not go through with the final batch, which includes “some of the most difficult” terrorists, if “nothing will happen afterward.” The official denied reports that Prime Minister Binyamin Netanyahu told Kerry his coalition would fall apart if he decided to go ahead with the final prisoner release.The Palestinians were demanding that 14 Israeli Arabs be released in the final batch, something that would be politically difficult for Netanyahu to get passed through the cabinet. The cabinet only has to reconvene to approve the final prisoner release if Israeli Arabs are included in the list.Deputy Defense Minister Danny Danon slammed the Palestinians for failing to make concessions in the peace process and for only being interested in releasing terrorists.“It is clear to all sides that the negotiations are leading nowhere and it good that the Palestinians understand that Israel will not make it concessions without receiving anything in return,” Danon said.”The true face of the Palestinians was revealed when they declared that their sole aim was to free terrorists.”State Department spokeswoman Jen Psaki said Saturday that the missed deadline did not mean that the negotiations had collapsed.“Any reports that suggest the talks are off are inaccurate,” she said. US Middle East envoy Martin Indyk and the US negotiating team “remain closely engaged with both parties on the ground, and will continue to work over the coming days to help bridge gaps and determine the path forward,” she added.Psaki said that Kerry, after meeting with Russian Foreign Minister Sergey Lavrov in Paris over the Crimean crisis on Sunday, may travel to the region to join Indyk in his efforts.One Israeli official said that efforts to find a formula that would break the impasse were continuing. He would not relate to reports that Israel had agreed to release another 400 Palestinian security prisoners of its choosing, along with the fourth batch of 26 pre-Oslo prisoners, if the Palestinians agree to remain at the table for another six months past the April 29 deadline for the talks.Meanwhile, officials in Ramallah said the Palestinian Authority was still waiting for a US reply regarding the fate of the prisoners.“The US administration previously sponsored the release of Palestinian prisoners so that we wouldn’t go to the United Nations and international agencies. Now it has to fulfill its commitment, and we are waiting for its reply,” Nimer Hammad, political adviser to PA President Mahmoud Abbas, said.Hammad said that the US administration should exert pressure on Israel to implement the understandings reached regarding the release of Palestinians imprisoned before the signing of the Oslo Accords.He said that if Israel refuses to release the fourth and final batch of prisoners, then Kerry should hold the Israeli government responsible for obstructing his efforts to achieve peace.Hammad said that the PA leadership does not intend to engage in a “war of statements” with Israel and prefers to give the US administration more time to pursue its efforts.PA Minister for Prisoners Affairs Issa Qaraqi sought to play down the crisis over the prisoners.The US, he said, is continuing its efforts to seek the release of the fourth batch of prisoners.“The prisoners won’t be released today [Saturday],” he added. “But the doors have still not been closed. The Palestinian leadership is waiting to see what the coming hours will bring.”Earlier, Palestinian officials denounced Israel for refusing to release the prisoners, dubbing it a severe blow to Kerry’s efforts to achieve peace.Fatah Central Committee member Jibril Rajoub told AFP that the Israeli government had informed the US of its decision not to release the prisoners.Another Fatah official, Ziad Abu Ain said that Israel was seeking to sabotage the agreement because of its “internal crisis” – a reference to the opposition of some Israeli ministers to the move.He accused Israel of working to “blackmail” the Palestinians by conditioning the release of the prisoners on the PA leadership’s agreement to the extension of the talks.Hazem Abu Shanab, a member of the Fatah Revolutionary Council, was quoted on Friday as saying that Israel would “regret” its decision not to release the prisoners on time.Abu Shanab told the Ma’an news agency that the decision would cause Israel “huge damage.”He urged the US administration to step up its pressure on Israel to fulfill its commitments toward the peace process.“Failure to release the prisoners will pave the way for various Palestinian steps that could change the political and diplomatic equation in the international arena,” Abu Shanab cautioned.Michael Wilner in Washington contributed to this report.