This aerial view shows displaced Palestinians returning to the war-devastated Jabalia refugee camp in the northern Gaza Strip on January 19, 2025, shortly before a ceasefire deal in the war between Israel and the Palestinian militant group Hamas was implemented. Omar Al-Qattaa, AFP/File

JERUSALEM -- Israel and Hamas are set for more indirect talks Sunday on the Gaza ceasefire, but deep divisions persist between the two warring sides on the terms of the fragile truce.

Mediated by Qatar, Egypt, and the United States, the initial phase of the ceasefire took effect on January 19, largely halting 15 months of deadly fighting in Gaza triggered by Hamas's October 7, 2023, attack on Israel.

That phase ended in early March, and though both sides have since refrained from all-out war, they have been unable to agree on the next stage of the ceasefire in the Palestinian territory.

Late Saturday, Prime Minister Benjamin Netanyahu instructed Israeli negotiators to continue the talks, his office said.

He directed them to base the negotiations on what his office said was a proposal by US Middle East envoy Steve Witkoff that calls for the "immediate release of 11 living hostages and half of the deceased hostages".

However, Witkoff told CNN on Sunday he had offered a "bridge proposal" that would see five living hostages, including Israeli-American Edan Alexander, released in return for freeing a "substantial amount of Palestinian prisoners" from Israel jails.

READ: Hamas says 'ball is in Israel's court' after hostage offer

"I thought the proposal was compelling," Witkoff said.

"The Israelis were informed about it and advised about it beforehand and after waiting for two or three days for Hamas... we got an unacceptable response.

"It was totally unacceptable. I think there is an opportunity for them but the opportunity is closing fast," Witkoff said.

A Hamas official said the group was ready to release Alexander and the bodies of four other Israeli-Americans.

"The delegation held fruitful discussions with our Egyptian brothers, focusing on ways to advance the implementation of the ceasefire agreement in light of Hamas's acceptance of the updated American proposal," he said.

"The delegation asked mediators and guarantors, the United States, to compel the occupation (Israel) to implement the humanitarian protocol, immediately allow humanitarian aid into Gaza Strip, and begin the second phase of negotiations," the official said on condition of anonymity as he was not authorized to speak publicly on the Gaza truce.

- Deadlock -

During the first phase of the truce agreement, Hamas released 33 hostages, including eight deceased, and Israel freed around 1,800 Palestinian detainees.

Since then, Hamas has consistently demanded negotiations for the second phase, which would include a permanent end to the war, a complete Israeli withdrawal from Gaza, the reopening of border crossings for aid, and the release of remaining hostages.

Israel, however, seeks to extend the first phase until mid-April, insisting that any transition to the second phase must include "the total demilitarization" of Gaza and the removal of Hamas, which has controlled the territory since 2007.

The talks are now at an impasse, with both sides sticking to their positions and accusing each other of obstructing progress.

"It's so hard for me to think about what they're (hostages) going through right now because I know that feeling," freed Israeli captive Omer Shem Tov said in a newly released video.

"It's a terrible feeling and it has to stop as soon as possible."

READ: Israel halts Gaza electricity supply ahead of new truce talks

Gaza resident Mohammad Hallas, 41, said Hamas had no choice but to agree to release the hostages.

"The fastest way for Hamas to reach a solution is to free the prisoners," Hallas told AFP.

"The situation in Gaza is catastrophic and worsens every day. Everything is in Israel's hands, and Hamas only has the prisoners as a bargaining chip."

The October 7 attack resulted in 1,218 deaths on the Israeli side, mostly civilians, according to an AFP tally based on official Israeli figures, which includes hostages who were killed or died in captivity.

In response, Israel vowed to destroy Hamas and launched a large-scale offensive in Gaza, which has killed at least 48,572 people, the majority of them civilians, according to figures from the Hamas-run territory's health ministry, which the United Nations considers reliable.

READ: Israeli air strike in Gaza ahead of new talks on truce with Hamas

- Air strikes -

Despite the fragile truce still holding, near-daily Israeli air strikes on Gaza continue.

On Saturday, strikes in north Gaza's Beit Lahia killed nine people, including four Palestinian journalists, said the territory's civil defense agency, in the deadliest attack on a single site since January 19.

Hamas condemned the attack as "a horrible massacre" and "a blatant violation of the ceasefire".

The Israeli military said it hit "a terrorist cell", adding that militants were operating a drone intended to carry out "terrorist attacks" against its troops.

© Agence France-Presse