Regional news agencies quoted a spokesman for the Israeli prisons department as saying that the prisoners would be handed over to the Palestinian authorities at the crossroads leading to Hebron, Tulkarem, Ramallah and the Gaza Strip.

Some 110 of the prisoners were Palestinians and the rest Arabs of different nationalities. None of those released were accused of of killing Israelis, the news agencies said.

Television pictures showed the prisoners boarding buses and smiling and waving the victory sign to press reporters and cameramen. Many of them were in tears as they longed to meet their near and dear ones.

Col. Jibril al-Rajoub, head of the Palestinian preventive security apparatus in the West Bank, welcomed the Israeli move saying, "it contributes to the building of confidence between the two sides and would encourage the PNA(Palestinian National Authority) to fight terrorism".

The prisoners were to be released on October 1 but the Palestinian and Israeli negotiators developed serious differences over the list of prisoners to be set free. Israel contended that it would not release the prisoners accused of carrying anti-Israeli acts while the Palestinians asserted that they could not be dictated on the issue.

Palestinians rejected the names of about 30 prisoners to be set free, saying they were anyway due to have served out their sentences by early next year.

The two sides returned later to the negotiating table and worked out an agreement in principle on Tuesday and met again on Wednesday to settle the final list.

Under the Sharm al Sheikh accord signed between Israel Prime Minister Ehud Barak and Palestinian President Yasser Arafat, those of the prisoners to be freed must have committed their offences before the interim Oslo Peace Agreement signed in 1993 and arrested before another deal reached in 1994.

Israelcommitted itself to releasing 350 Palestinian prisoners under the accord. It had released 199 prisoners on September 9 and thereafter vacated seven per cent of the West Bank territory for the Palestinian civil control.

Israel is also expected to open a "safe passage" route between the West Bank and the Gaza Strip on Sunday to meet a long-standing demand of the Palestinians that they be allowed to travel between the two places to meet their relatives and friends.