The most senior Hamas leader being held by Israel was freed Tuesday after serving the bulk of his three-year sentence.
Also Tuesday, an Israeli group said the government has formulated plans to allow the construction of 240 new homes in an unauthorized settlement outpost, a move that would flout a U.S. call for a settlement freeze.
The Hamas-affiliated speaker of the Palestinian parliament, Abdel Aziz Duaik, is one of dozens of Hamas politicians arrested after Gaza Strip militants loyal to the group captured an Israeli soldier in June 2006.
It was unclear whether the release was simply a procedural issue or a precursor to a greater development. However, Hamas has demanded the release of its lawmakers as part of any prisoner swap with Israel.
Soldier remains captive
The soldier, Sgt. Gilad Schalit, will mark three years in captivity on Thursday. Negotiations over a prisoner swap that would trade him for hundreds of Palestinians have stalled.
Palestinians and Israelis demonstrated on either side of the Gaza-Israel border on Tuesday, demanding a prisoner swap.
An Israeli military court sentenced Duaik to 36 months in prison for belonging to Hamas. Duaik is in his early 60s and suffers from high blood pressure and diabetes. His lawyer, Fadi Kawasmi, said inmates' terms routinely are shortened by several months for good behavior.
Hamas would not say whether Duaik, who was released into the West Bank, would resume his duties as parliament speaker. The Palestinian parliament has not functioned since Hamas seized control of Gaza in June 2007, in effect creating a two-headed Palestinian government with Palestinian President Mahmoud Abbas ruling the West Bank.
Shopkeepers rushed over to greet Duaik after he crossed over into the West Bank, passing out sweets to celebrate his release.
"My body is free, but my soul is still in jail with the other prisoners," said Duaik.
Hamas says 35 more of their parliamentarians are still in Israeli prisons.
A Hamas spokesman in Gaza, Sami Abu Zuhri, welcomed the release as "tilting the balance" toward Hamas in the West Bank. He also predicted it would revitalize the long-defunct Palestinian parliament.
Hamas' archrival, the West Bank Palestinian government led by Abbas, coolly received Duaik, dispatching its relatively unknown minister for prisoner affairs to greet the freed speaker.
Plans to legalize settlement
Meanwhile, an Israeli group said the government has formulated plans to legalize 60 existing homes at an unauthorized settlement outpost in the West Bank and allow the construction of 240 other residences.
Such a move would flout a U.S. demand for a settlement freeze. It would also bolster the claim by Palestinians that the unauthorized outposts are intended to permanently seize land they want as part of their future state.
The plans were approved by Israel's defense minister, Ehud Barak, and filed with authorities in April, according to Bimkom, a private Israeli group that specializes in planning issues.
The Defense Ministry had no immediate comment.
The outpost, known as Water Reservoir Hill, is just several hundred yards (meters) from an established Israeli settlement, Talmon, not far from Ramallah, the seat of Abbas' Palestinian government.
It is one of more than 100 wildcat settlements that have been erected without official government approval but typically with the cooperation of government agencies.
The international community sees the settlements as an obstacle to peace because they complicate the possibility of an Israeli withdrawal from territories the Palestinians want for a future state.
Prime Minister Benjamin Netanyahu is engaged in an unusually public dispute with Washington over Israel's insistence on continuing to build in existing settlements. This week, during a trip to Europe, Netanyahu is slated to meet with U.S. envoy George Mitchell, a meeting which is expected to touch on the settlements issue.
Since 1967, Israel has built 121 West Bank settlements, now home to around 300,000 Israelis. An additional 180,000 live in Jewish neighborhoods in east Jerusalem, which, like the West Bank, was captured by Israel in the 1967 Middle East war.