Israel has agreed to release 71 Palestinian prisoners in return for kidnapped IDF soldier Gilad Schalit, a senior Hamas official said during an interview with the London-based pan-Arabic newspaper, Al-Hayat. In a report published on Sunday, deputy chairman of Hamas's political bureau, Moussa Abu Marzouk, said that despite the progress, the group was sticking to its original demand that Israel release 270 prisoners. According to Marzouk, Israel steadfastly refuses to release prisoners with "blood on their hands." The Defense Ministry's Diplomatic-Military Bureau chief, Maj.- Gen. (res.) Amos Gilad denied the report of an agreement. Speaking to Army Radio, Gilad said such reports "have no connection to the real result, which is the release of Schalit well and unharmed." Meanwhile, a senior Hamas official in the Gaza Strip said over the weekend that the group had not ruled out including Schalit's release in a cease-fire deal with Israel. His statement is seen as a departure from Hamas's earlier position that Schalit should be dealt with separately from a truce agreement. Hamas leaders were quoted last week as saying that Schalit would not be released as part of the proposed truce. Israel informed Egyptian intelligence chief Omar Suleiman last week that one of the conditions of Israel accepting a cease-fire agreement was the release of the kidnapped soldier. Foreign Minister Tzipi Livni was scheduled to meet Sunday with Egyptian President Hosni Mubarak on the sidelines of the World Economic Forum meeting in Sharm e-Sheikh. Livni was also expected to meet with Jordan's King Abdullah II. Livni's talks with Mubarak were expected to focus on the cease-fire deal that the Egyptians are trying to broker. The next day, Defense Minister Ehud Barak is also expected to meet Mubarak in Sharm e-Sheikh. A Hamas delegation is scheduled to arrive in Cairo Monday for talks with Suleiman and other top Egyptian government officials on the proposed temporary truce. The delegation, headed Marzouk and Mahmoud Zahar, the senior Hamas representative in the Gaza Strip, was scheduled to arrive in Cairo over the weekend. But the visit was postponed until Monday because of the Egyptian government's preoccupation with the arrival of US President George W. Bush to take part in the World Economic Forum. "We don't rule out the possibility that Schalit would be part of a cease-fire agreement," the Hamas official told The Jerusalem Post. "It all depends on the price Israel is prepared to pay in return for the soldier." The official said that his movement was keen on resolving the case of Schalit as soon as possible. "We don't want to hold onto him forever," he continued. "Israel knows what it has to do if it wants to release Schalit." According to the Hamas official, the Egyptians have notified his movement that Israel has "softened" its position and is now willing to accept many of the captors' demands. Although he did not elaborate, the official hinted that Israel was willing to release several Palestinian prisoners who were directly involved in terrorist attacks. Israeli government sources, however, denied that Jerusalem had "softened" its stance, saying instead that it was Hamas that had realized it would have to give up on some of the security prisoners that it was demanding in exchange for Schalit. The sources added that a failure by Hamas to include Schalit in the cease-fire proposal would be a "deal breaker." "If Schalit is not part of the deal, there will not be one," one source said. "If he is, and there is an agreement for a six-month cease-fire, it will be difficult for the government to say 'No.'" Israel has laid out the following conditions for a truce: Schalit's release, the end of rocket fire and all terrorist action from Gaza, and an end to arms smuggling into the Strip. Israel, according to government officials, does not believe that Hamas would honor any commitment to stop arms smuggling, and is trying to prod the Egyptians into taking a much more active role. This, along with the release of Schalit, is expected to be one of the focuses of Barak's talks with the Egyptian president. Suleiman was in Israel last Sunday, and the fact that Livni and Barak are holding discussions with Mubarak indicates that the cease-fire idea is still alive. Prime Minister Ehud Olmert's office announced last week that he was also expected to go to Egypt in the near future, but that visit is not expected to take place until Israel has an affirmative answer for the Egyptians on the smuggling. Ayman Taha, a spokesman for Hamas in the Gaza Strip, said that Israel had already accepted "in principle" the latest Egyptian truce initiative. He added that the Hamas delegation scheduled to arrive in Cairo Monday would be briefed by Suleiman on his talks in Israel. "We will discuss with the Egyptian brothers the conditions that Israel set for accepting the truce," Taha said. An Egyptian diplomat told the Post he was "optimistic" about reaching an agreement on a truce and a prisoner exchange. "A cease-fire will pave the way for a prisoner exchange," he said. "Of course these two issues are connected. But our position is that we should first go to a truce and immediately begin talks about a prisoner exchange." The diplomat said that representatives of other Palestinian factions would be invited to Cairo later this week to discuss the truce initiative. "So far, all the Palestinian groups have accepted the initiative," he said. "Israel has also accepted it, though it still has some reservations about it."