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Applause and cheers filled a Tel Aviv square today NZT as Gaza militants released four Israeli hostages, followed by celebrations in the occupied West Bank when Israel freed 200 Palestinian prisoners in exchange.

While Israel and the militant group Hamas completed their second hostage-prisoner swap under a ceasefire deal aimed at paving the way for a permanent end to their war, a last-minute dispute blocked the expected return of hundreds of thousands of displaced Palestinians to the Gaza Strip’s devastated north.

The four hostages released, all female soldiers, reached a hospital on the outskirts of Israel’s commercial hub Tel Aviv after more than 15 months of captivity in Gaza.

Israel’s prison service confirmed that 200 Palestinian prisoners were freed in exchange, with some of them subsequently deported.

The Israeli captives, Karina Ariev, Daniella Gilboa, and Naama Levy, all aged 20, and Liri Albag, 19, waved, smiled, and gave thumbs up as they were paraded on a stage in Gaza City, flanked by masked and armed militants.

After their handover to the International Committee of the Red Cross, the military said the women were brought to Israel and “reunited with their parents”.

In Tel Aviv, where a crowd gathered to watch their release on a large TV screen at a plaza known as Hostage Square, there were tears of joy, applause, and a loud cheer as Israeli flags waved.

In Ramallah, seat of the Palestinian Authority in the West Bank, crowds of Palestinians erupted in joy as dozens of freed prisoners arrived on buses from jail.

One of them, Azzam al-Shallalta, dropped to his knees and wept at his mother’s feet after the teary-eyed crowd carried him on their shoulders, an AFP journalist reported.

“My situation was heartbreaking, truly heartbreaking. We pray to God to free all our brothers we’ve left behind,” said Shallalta, still wearing his grey prison tracksuit.

According to a list provided by the Palestinian Prisoners Club advocacy group, among those released was Mohammed al-Tous, 69, who has spent the longest continuous period in Israeli detention. Data from the Israeli authorities suggested he was to be deported.

The freed Israeli hostages were taken by military helicopter to the Rabin Medical Centre, whose deputy director Lena Feldman Koren said the four were in a “stable” condition even though “the prolonged captivity in harsh conditions is evident”.

Footage released by the military showed the families overcome with joy at being back together.

Albag and her parents were seen screaming with happiness and laughing while her father lifted her off the ground in a bear hug.

More hostages have been freed as Palestinians continue to return to their homes in Gaza. Photo / Getty Images

Prime Minister Benjamin Netanyahu spoke with Albag’s parents after her release, telling them that “this is a very happy moment that we have been waiting for a long time”, according to a statement from his office.

Bulgaria’s Foreign Ministry welcomed with “great relief” the release of Gilboa, who is a dual national.

The United States, which had helped secure the truce deal, said it “will continue with its great partner Israel to push for the release of all remaining hostages”.

Bassem Naim, of the Hamas political bureau, had told AFP yesterday that Palestinians displaced from northern Gaza by the war should have been able to begin returning home after today’s releases.

But Israel announced that it would block such returns until civilian female hostage Arbel Yehud is released.

Netanyahu’s office said she “was supposed to be released today” but a Hamas source told AFP Yehud will be “released as part of the third swap set for next Saturday [local time]”.

Palestinian police prevented hundreds of displaced people from reaching the Israeli-controlled passage to the north, where Israeli tanks and armoured vehicles were blocking the road.

Rafiqa Subh, waiting to return to Beit Lahia, said: “We want to go back, even though our houses are destroyed. We miss our homes so much.”

The hostage-prisoner exchange is part of a fragile ceasefire agreement between Israel and Hamas that took effect last week.

The truce has brought a surge of food, fuel, medical, and other aid into rubble-strewn Gaza, but Israel’s United Nations ambassador confirmed that the UN agency for Palestinian refugees, Gaza’s main aid agency, must end all operations in Israel by Friday.

Hundreds of truckloads of aid have entered Gaza daily since the ceasefire began, but the UN says that “the humanitarian situation remains dire”.

The ceasefire agreement should be implemented in three phases, but the last two stages have not yet been finalised.

During the first, six-week phase, 33 hostages should be freed in staggered releases in exchange for about 1900 Palestinians held in Israeli jails.

Three women hostages returned home on the first day of the truce in exchange for 90 Palestinians.

Of the Palestinians to be freed in the first phase, more than 230 are serving life sentences for deadly attacks on Israelis and will be permanently expelled, according to a list made public by Israeli authorities.

State-linked Egyptian media said 70 freed Palestinian prisoners “deported” by Israel had arrived in Egypt by bus. They were to travel on into exile in third countries.

The deal’s second phase is to see negotiations for a more permanent end to the war, but analysts have warned it risks collapsing because of the deal’s multi-phase nature and deep distrust between Israel and Hamas.

During their October 7, 2023 attack that began the war, Hamas militants took 251 hostages, 87 of whom remain in Gaza, including 34 the Israeli military says are dead.

The attack resulted in the deaths of 1210 people, mostly civilians, according to an AFP tally based on official Israeli figures.

Israel’s retaliatory offensive has killed at least 47,283 people in Gaza, the majority of them civilians, according to figures from the Hamas-run territory’s Health Ministry which the United Nations considers reliable.

- Agence France-Presse