A Hamas official in Gaza has today confirmed that radical Islamic group Hamas and Israel have agreed a truce which begins on Thursday.
Israeli officials would only say Israel's negotiator in the truce talks was rushing to Cairo and that they were "cautiously optimistic".
An Israeli government spokesman said: "What is important is not only words but deeds. If there is a total absence of terror attacks from Gaza into Israel and if there is an end to arms buildup in Gaza Strip and movement on the hostage Gilad Schalit that will indeed be a new reality."
A MENA news agency earlier quoted an unnamed high-level Egyptian official as saying that both sides "have agreed on the first phase" of an Egyptian package to end the violence in the coastal strip.
It says the first phase is a "mutual and simultaneous calm" in the Gaza Strip which will start at 6am on Thursday (4am Irish time).
Egypt has long been trying to broker a ceasefire that will stop rocket attacks by the Palestinian militants against Israel, in exchange for Israel halting its attacks on the Hamas-controlled the Gaza Strip.
Israeli defence officials, however, said they expect negotiations on Mr Schalit to begin on Sunday, a tacit admission that a truce was in the pipeline.
The development came shortly after an Israeli airstrike in the Gaza Strip killed five militants in southern Gaza.
Hamas accused Israel of trying to derail the ceasefire efforts, but stressed the group remained open to a truce.