Under the deal that relaunched peace talks last July, Israel agreed to release 104 Arabs held since before the 1993 Oslo peace accords in exchange for the Palestinians not pressing their statehood claims at the United Nations.
The prisoner release was also dependant on progress in the negotiations, of which there has so far been no sign.
Until now, Israel has freed 78 prisoners in three batches but ministers had warned they would block the final release, which had been anticipated for tomorrow, if the Palestinians refused to extend the talks beyond their April 29 deadline.