CAIRO/JERUSALEM - Palestinian militants began handing over three Israeli hostages in Gaza on Thursday in return for 110 Palestinian prisoners to be freed in the latest stage of a ceasefire deal.

An Israeli soldier, Agam Berger, wearing an olive green uniform, was led through a narrow ally between heavily damaged buidings and over piles of rubble in Jabalia in northern Gaza before being handed to the Red Cross.

Gadi Moses, 80, and Arbel Yahud, 29, both abducted from Kibbutz Nir Oz in the Hamas-led assault on Israel on Oct 7, 2023, hugged one another in the presence of masked gunmen in black uniforms, a video released by Hamas ally Islamic Jihad showed. They are expected to be handed over at another site, in Khan Younis, in southern Gaza.

Militants thronged the site of the bombed house of Hamas leader Yahya Al-Sinwar, who was killed during the 15-month Gaza conflict with Israel - in a potent reminder that Hamas, which Israel vowed to obliterate, still has a strong presence in Gaza despite heavy bombardment from the Middle East's most advanced military.

The Palestinian prisoners, who include 30 minors and some members of Palestinian groups convicted for their involvement in deadly attacks in Israel, will be taken to the West Bank or Gaza later in the day.

Five Thai nationals, among those abducted in the 2023 Hamas attack on Israel, are also expected to be freed by militants in Gaza in a separate agreement, Israel and Hamas have said.

The hostages were expected to be taken to three different hospitals in Israel, though that could change depending on their immediate inspection from doctors upon arrival.

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Israelis gathered in what has become known as Hostages Square, a central square in Tel Aviv, which has become the main location for efforts to campaign on behalf of hostages being held in Gaza, cheering and crying as they watched the release on a giant screen.

Around half the hostages were released the following month during the only previous truce, and others have been recovered dead or alive during Israel's military campaign in Gaza.

Hundreds of thousands of Gazans, most replaced repeatedly during the conflict, have returned to their neighborhoods in the north, where the fighting was most intense. Many have found their homes to be uninhabitable and basic goods in short supply.

Israel still lists 89 captives in Gaza, with around 30 declared dead in absentia.

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In the course of the conflict triggered by the Hamas attack, Israel has killed leaders of Hamas and Lebanon's Hezbollah.

Israeli forces have stepped up operations in another Palestinian territory, the West Bank, since the Gaza ceasefire came into effect, saying they are targeting militants there.