Negotiations to free an Israeli soldier captured near the Gaza Strip nearly three years ago deadlocked in Cairo overnight, and the Israeli cabinet was scheduled to meet today to pass the issue off to the new government of incoming Prime Minister Benjamin Netanyahu.

Israel has been negotiating through an Egyptian intermediary with the Islamic Resistance Movement, Hamas, to exchange Gilad Shalit for hundreds of prisoners in Israeli jails.

But Israel's negotiators returned home Tuesday without a deal.

"We were willing to be flexible, but it doesn't appear it is going to be possible" to reach a deal before outgoing Prime Minister Ehud Olmert's term in office ends, probably over the next few days, said Olmert spokesman Mark Regev.

The list of prisoners demanded by Hamas included individuals convicted of violent acts against Israelis as well as a number of Palestinian political figures.

The discussions apparently foundered, in part, over Hamas's insistence that all the prisoners on the list be released, and Israeli demands that some not be allowed to return to homes in the West Bank.

The Shalit negotiations took on a sense of urgency in recent weeks, as members of his family and other supporters urged Olmert to strike a deal before leaving office.

But the terms proposed by Hamas were not easy for the Israeli public to accept. Alongside protesters urging Shalit's release, others said the country should not bargain to free people who had killed Israelis.

A last-minute breakthrough is still possible, but heading into the cabinet session, Israeli officials said they expect Netanyahu will have to determine how negotiations will proceed.

Shalit's parents and others have said they do not expect that a new government will treat the matter with the same urgency, at least at first.

Shalit was captured in a cross-border raid near the Hamas-controlled Gaza Strip. Olmert considered it a priority to resolve a problem that developed during his tenure.