Some restrictions on Palestinians entering Israel are also to be eased and some streets and homes sealed by the army reopened.
The announcement, issued directly from the office of the Prime Minister, Yitzhak Rabin, will immediately place the diplomatic ball in the Palestinian and Arab courts, putting pressure on them to make concessions and, in particular, to lift the Arab trade boycott against Israel. The move is clearly designed to demonstrate new Israeli commitment to achieving progress in the talks, to win favour with the Bush administration, and to place the Palestinian delegation on the defensive.
The announcement was attacked by right-wingers, who accused Mr Rabin of giving a free rein to terrorists.
Already the Palestinians have come under pressure to compromise as a result of the rapprochement between Israel and the US and the desire by the Bush administration for a foreign policy success before the autumn election.
However, the practical effect of the changes will not be as far- reaching as the statements may imply. There are 7,429 Palestinian prisoners in Israeli jails, largely serving sentences for so-called 'intifada-related activities'. In addition there are 303 prisoners jailed without trial under administrative detention. The 800 prisoners to be released are all tried detainees who have served at least two-thirds of their sentences, and are not in Israel's higher categories of political prisoner.
About 200 houses in the West Bank and 77 in the Gaza Strip have been sealed since the beginning of the intifada in 1987 and their owners evicted. It was not clear yesterday how many were to be reopened, but only those sealed at the beginning of the intifada are on the list.
The lifting of restrictions on Palestinian movement applies largely to people seeking to re-enter Israel to work from the Gaza Strip. At the moment only those aged 60 or over need no special permit - the age for free movement will now be lowered to 50. There may also be an easing of restrictions for Palestinians entering Israel from the West Bank but these details were less clear.
Israel has asked for a Palestinian commitment to end the intifada in return for its peace overtures.
Mr Rabin, who also holds the defence portfolio and therefore has direct control of such security decisions, has been considering the release of political prisoners for some weeks as a way to build confidence. As defence minister in the late 1980s it was he who introduced some of the more draconian occupation measures when he instituted the 'iron fist' policy against the Palestinians, promising to 'break their bones'.
The Palestinians have argued that without so-called 'confidence-building measures' people in the occupied territories would lose faith in the peace process and withdraw support from the delegation. Yesterday the Palestinian delegates were unable to react directly to the Israeli announcements as they were en route to Washington. Ironically, their departure to the talks was delayed by a row over human rights violations when members of their delegation were held up by Israeli security at the crossing point between the West Bank and Jordan.Reuse content