Hamas accepted an Israeli compromise to release 120 prisoners out of hundreds in order to achieve a prisoner exchange deal, a Lebanese newspaper reported on Wednesday.

The indirect talks between Hamas and Israel stopped after Israel rejected Hamas' insistence to select the names of the first 450 prisoners that Israel would release to retrieve its soldier, Gilad Shalit, who has been held hostage in Gaza since 2006.

But the al-Akhbar newspaper reported that Israel and Hamas "have shown positive signs indicating their intention to overcome the obstacles."

"Hamas has accepted that Israel deports 120 of the prisoners, who live in the West Bank, to the Gaza Strip, Syria or Qatar," according to the newspaper.

It added that the indirect talks between Hamas and Israel did not stop, with the main obstacle remaining in seven prisoners that Israel strongly refuses to release as part of the swap. The seven are senior leaders of Hamas, Fatah and the Popular Front for the Liberation of Palestine.