Israel does not rule out the release of Samir Kuntar, the Lebanese terrorist whose freedom has long been sought by Hizbullah leader Hassan Nasrallah, in the framework of a deal to bring home captured IDF soldiers Ehud Goldwasser and Eldad Regev, The Jerusalem Post has learned. Kuntar, the longest-serving confirmed Lebanese prisoner in jail in Israel, is serving multiple life terms for the killing of three members of the Haran family and that of policeman Eliyahu Shahar in a raid on Nahariya in 1979. Last month, relatives of Kuntar, who comes from a Druse family outside Beirut, urged the Goldwasser and Regev families to press Prime Minister Ehud Olmert to agree to an exchange, and some relatives of the Israeli pair have called on the government to do "whatever it takes" to bring home the two soldiers. A senior Israeli source said on Sunday that Israel intended to ensure the implementation "to the letter" of UN Resolution 1701, which includes, in its opening, non-binding paragraphs, unlinked references to "the unconditional release of the abducted Israeli soldiers" and to "settling the issue of the Lebanese prisoners detained in Israel." Asked whether Israel might free Kuntar in an exchange deal, the senior source did not rule this out, but said Israel would have to ascertain exactly "what is being offered." He declined to elaborate, but it is possible that this may have been a reference to the possible inclusion in a deal of information on missing Israeli airman Ron Arad. Israel has previously shown a readiness to free Kuntar in the context of a deal involving news about Arad. Indeed, it was reported that Kuntar would be released in the second phase of a German-mediated prisoner deal with Hizbullah in 2004, in exchange for information on Arad. That phase of the deal was not implemented. In 1979, Kuntar and his cohorts broke into the Nahariya apartment of Smadar and Danny Haran. They marched Danny and four-year-old Anat to the beach, where they smashed the child's head against the rocks and then shot the horrified father. Smadar hid in a loft with the couple's two-year-old daughter, Yael, clamping her child's mouth to muffle her cries lest they be detected by Kuntar's band, only to discover she had smothered Yael to death. Later Monday, Prime Minister Ehud Olmert denied reports of imminent deals for the release of Shalit, Goldwasser and Regev at the opening of Monday's Foreign Affairs and Defense Committee meeting. "All information released regarding the return of the soldiers is incorrect. We are indeed continuing our efforts, but everything that has been said is simply groundless," Olmert stated. Shlomo Goldwasser said recently: "I think that anything is justified to release my son... Those who sent him there have to bring him back and pay any price." He added: "I don't want to go into this business of Samir Kuntar or others. They have to pay a price to bring my son back." Benny Regev, Eldad's elder brother, said that getting back "two young men that can build their lives here" was "more important than Samir Kuntar, although he is a murderer." The senior Israeli source's comments came as Germany's intelligence chief Ernst Uhrlau, who helped mediate the 2004 Israeli-Hizbullah swap that led to the release of Elhanan Tannenbaum and the return of the bodies of three IDF soldiers, left Beirut after holding talks there over the weekend with Lebanese officials. The comments also came amid a flurry of reports in the Israeli and Arab media that a deal was in the works with the Palestinians for the release of Cpl. Gilad Shalit. The latest came on Monday morning, when the Qatar-based A-Sha'ark newspaper reported that a deal has been reached in which kidnapped Shalit would be exchanged for 1,400 Palestinian prisoners. According to the newspaper, the exchange will be completed within the next 48 hours. Israel Radio reported that as part of the agreement Israel would release funds to the Palestinian Authority, while suicide bombings and Kassam rocket attacks on Israel would cease. There was no other confirmation from another source. The Post reported Friday that Egyptian officials told their Israeli counterparts that Shalit's kidnappers would release him in exchange for the freeing of 1,000 Palestinian prisoners in two stages. Officials in both the Foreign Ministry and the Prime Minister's Office said that the reports were "not correct." The only thing that was confirmed was that Ofer Dekel, the prime minister's representative to oversee the release of the soldiers, was recently in Cairo. Egypt has played a lead role in trying to put together a deal for Shalit's release. PA Prime Minister Ismail Haniyeh said Sunday Egypt was continuing to play a "good" role in efforts to bring about the release of Shalit. "There is some movement with regards to this case," he told reporters in Gaza City, without elaborating. Haniyeh expressed hope that the case would be resolved soon and that Egypt's mediation efforts would end successfully. "Any solution to this crisis must take into consideration the plight of more than 10,000 Palestinian prisoners who are being held by Israel," he said. Shalit's father, Noam, meanwhile, said he was not encouraged by the news reports of a possible deal in the making. "There is contact, but no progress," he said in an Israel Radio interview. "Therefore I am not encouraged. There is only progress in the newspapers." He said that the Egyptians were playing an active role, but that progress was dependent on Damascus, where Hamas head Khaled Mashaal is headquartered. Shalit said that from Damascus "there is no sign of a willingness to move forward. One of the signs that will show that they want to make progress is a sign of life from Gilad, that he is alive and well. That will show more than anything that they are ready and willing to reach an agreement." Khaled Abu Toameh contributed to this report.