(Co)

JERUSALEM (Reuters) - Hamas on Monday announced it would stop releasing Israeli hostages until further notice over what the Palestinian militant group said were Israeli violations of the ceasefire agreement.

The unexpected announcement comes amid growing doubts over an already fragile ceasefire even as families of the Israeli hostages urge the government to stick to the deal and Gazans try to start rebuilding their lives in the shattered enclave.

Hamas was to release some Israeli hostages on Saturday in exchange for Palestinian prisoners and other Palestinians held in Israeli detention as had happened over the past three weeks.

Hamas military wing spokesperson Abu Ubaida said Israeli violations had included Israel delaying Palestinians from returning to northern Gaza, targeting Palestinians with Israeli shelling and gunfire and stopping aid from entering the strip.

The ceasefire has largely held since it began January 19, although there have been some incidents where Palestinians have been killed by Israeli forces. The amount of humanitarian aid into Gaza has increased since the ceasefire, aid agencies say.

But Hamas' Ubaida said the next scheduled release of hostages on Saturday would be postponed until Israel complies with the ceasefire agreement and "compensates for the past weeks".

Israeli Defence Minister Israel Katz said Hamas' announcement violated the ceasefire deal and that he had instructed the military to prepare at the highest level of readiness in Gaza and to defend Israeli communities.

An Israeli official said the prime minister was holding security consultations. The security cabinet of select ministers, including defence, national security and foreign affairs, would meet on Tuesday morning, the official said.

Two Egyptian security sources told Reuters on Monday mediators fear a breakdown of the ceasefire agreement. Qatar and Egypt brokered the deal alongside the United States.

A group representing hostage families called on mediators to stop the deal from breaking down, while another group representing Israeli military veterans accused the government of intentional sabotaging the ceasefire agreement.

HOSTAGE RELEASE

So far, 16 of the 33 hostages to be released in the first 42-day phase of the deal have come home, as well as five Thai hostages who were returned in an unscheduled release.

In exchange, Israel has released hundreds of prisoners and detainees, ranging from prisoners serving life sentences for deadly attacks to Palestinians detained during the war and held without charge.

But Hamas has accused Israel of dragging its feet on allowing aid into Gaza, one of the conditions of the first phase of the agreement, a charge Israel has rejected as untrue.

In turn, Israel has accused Hamas of not respecting the order in which the hostages were to be released and of orchestrating abusive public displays before large crowds when they have been handed over to the Red Cross.

Earlier, the office of Israeli Prime Minister Benjamin Netanyahu had said an Israeli delegation had returned from ceasefire talks in Qatar, amid already growing doubts over the Egyptian and Qatari-brokered process to end the war.

There were no immediate details on the reason for the return from the talks, which are intended to agree the basis for a second stage of the multi-phase ceasefire agreement and hostage-for-prisoner exchange reached last month.

A Palestinian official close to the discussions said progress was being held up by mistrust between the two sides, which have accused each other of breaching the terms of the ceasefire.

U.S. President Donald Trump's statements that Palestinians should be moved out of Gaza, leaving the coastal enclave to be developed as a waterfront real estate project under U.S. control have upended expectations for the postwar future.

Fox News on Monday released an excerpt of an interview with Trump. Asked about the plan and whether Palestinians would have the right of return, he answered: "No, they wouldn't".

"I'm talking about building a permanent place for them because if they have to return now, it’ll be years before you could ever – it's not habitable." He said he thought he could make a deal with Egypt and Jordan to take them.

Netanyahu endorsed Trump's comments when he returned from a visit to Washington at the weekend, causing irritation in Egypt, where security sources said Israel was "putting up roadblocks" to the smooth progress of the ceasefire deal, including delays to withdrawal of its troops and continuing aerial surveillance.

Talks on a second stage of the ceasefire deal, to agree the release of the remaining hostages and a full withdrawal of Israeli forces, began last week but have shown little sign of serious progress.

"There is a sense of mistrust, especially as Hamas sees a lack of implementation of the first phase of the deal when it comes to the humanitarian protocol and the allowing of the materials into Gaza as per the agreement," the official said.

Israeli public opinion was shocked by the emaciated appearance of Ohad Ben Ami, Eli Sharabi and Or Levy, the three hostages who were released on Saturday, which has complicated progress on the deal.

(This story has been corrected to clarify that the Israeli PM is holding security consultations on Monday, not convening the security cabinet, which will meet on Tuesday, in paragraph 8)

(Reporting by James Mackenzie, Emily Rose and Alexander Cornwell in Jerusalem and Nidal al-Mughrabi and Ahmed Mohamed Hassan in Cairo Menna Alaa El-Din in Cairo and Nayera Abdallah in Dubai; Editing by Bernadette Baum and Ros Russell)