The Ministerial Committee for Prisoner Releases approved late last night the release of the 26 Palestinians who were imprisoned before the 1993 Oslo Accords.
The Prime Minister's Office said the prisoners had served sentences of between 19-28 years. They had been sentenced to life imprisonment and were convicted of murder or accessory to murder.
The prisoners' names were posted overnight on the website of the Israel Prison Service.
This will be the third batch of prisoners to be freed since August when Israel agreed to release 104 Palestininas in four phases to push ahead peace talks with the Palestinians that was resumed in July under US mediation after three years.
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Other groups of prisoners have been freed on August 13 and October 30.
A press release from the Prime Minister's Office said it was made clear during ministerial discussions that if any of those released return to terrorist activities would be recaptured and put back into prison to serve the remainder of their sentences.
Some of the coalition allies in Netanyahu's overwhelmingly right-wing dominated government have been fiercely opposing the release of Palestinian prisoners and the announcement to build new houses is being seen as a measure to appease such disgruntled parties.
US Secretary of State John Kerry is expected to arrive in Israel on Wednesday to press the two sides to agree to an interim agreement by April when the nine-month timeline for the negotiations end.