Israeli Prime Minister Benjamin Netanyahu said Hamas would release six hostages this week and Israel would allow Gazans to return to their homes in the north from Monday.
The hostages include Arbel Yehud – a civilian at the center of a row that has led Israel to delay the return of Gazans to North Gaza.
Hamas released four soldiers on Saturday but not Ms Yehud. Israel accuses Hamas of violating the ceasefire agreement, which requires Israeli civilians to be released first in exchange for the release of Palestinian prisoners.
Since the ceasefire agreement came into effect, seven hostages and more than 200 prisoners have been released.
Thousands of displaced Palestinians trying to reach Canada in northern Gaza have converged on military barriers, blocking their progress for two days.
On January 19, a ceasefire and a hostage and prisoner release agreement came into effect. Both exchanges have been completed.
In the third, Hamas will release Ms Yehud and two other hostages on Friday, followed by three more on Saturday, with Netanyahu and Qatar mediating.
Israel will begin allowing Palestinians to move north on Monday and release more Palestinian prisoners later this week.
Under the terms of the ceasefire agreement, Palestinians plan to be allowed to travel north of the Netzarim corridor, a 7-kilometer (4.3-mile) stretch of land controlled by Israel that was cut off from the rest of the region on Saturday. Gaza.
Images show large crowds waiting to pass.
Qatari and Egyptian mediators who facilitated talks between Israel and Hamas were involved in efforts to resolve Ms Yehod. A spokesman for Qatar’s foreign ministry announced the breakthrough moment ahead of the Israeli prime minister.
Israel has asked mediators to provide Hamas with evidence that Ms Yehud is still alive. The BBC understands it appears to have been handed to the Egyptians as early as Saturday night.
January’s ceasefire halted the war, which began on October 7, 2023, when Hamas attacked Israel. About 1,200 people were killed and 251 were taken back to Gaza as hostages.
Gaza’s Hamas-run health ministry said more than 47,200 Palestinians, mostly civilians, had been killed in the Israeli offensive.