The Palestinian leadership angrily denied at the weekend that a mooted prisoner release by Israel was part of understandings in peace talks which in exchange would allow Israel to build more settlements.

Israeli media said this week that ministers were to meet yesterday to approve the release of a second batch of Palestinian prisoners under the terms of the renewed peace talks.

Public radio said that in tandem with confirming the release Israeli authorities would announce a new tranche of settler housing to be built in the occupied West Bank or in east Jerusalem.

An Israeli official claimed on Thursday that such continued construction was part of "understandings" reached with the Palestinians and the US before the renewal of talks.

"Israel will continue in the coming months to announce building in the settlement blocs and in Jerusalem," he wrote.

"Both the Americans and the Palestinians were aware in advance of these understandings."

But Palestine Liberation Organisation (PLO) secretary-general Yasser Abed Rabbo denied that any such understandings existed.

"Establishing a link between settlements and the freeing of prisoners goes against all the undertakings made," he said. 

It would "create a very dangerous situation that we would not accept at any cost."

He added that the US had actually "promised that it would manage to reduce Israeli settlement activities to a minimum.

"If President Mahmoud Abbas had known that Israel intended to make a link between prisoners and settlements, he would have never agreed to relaunch negotiations."

PLO executive committee member Hanan Ashrawi said that the reports were "fabricated and malicious." 

The Palestinian side never agreed to such an exchange.

"On the contrary, Palestinian prisoners should have been released in compliance with earlier signed agreements," she said.

"The only linkage with the release of prisoners is in delaying the pursuit of UN membership in international agencies and organisations."

Direct peace talks resumed in July after a break of nearly three years had been created by Israeli Prime Minister Benjamin Netanyahu's refusal to extend a moratorium on construction of new settler housing in the occupied West Bank and Arab east Jerusalem.