Former US President Jimmy Carter has said that Hamas is prepared to accept the right of Israel to "live as a neighbour next door in peace".
After meeting Hamas leaders last week in Syria, he said it was a problem the US and Israel would not meet the group.
His comments came as the Israeli army launched a formal investigation into the death of a Reuters cameraman killed in the Gaza Strip last week.
And two Palestinians died in Israeli air strikes in the territory.
Monday's strikes killed one Palestinian in the southern city of Rafah and a Hamas militant at Beit Hanoun, a border town from where rockets are often fired at Israel.
'Regressed'
Mr Carter, speaking in Jerusalem, said Israeli-Palestinian peacemaking had "regressed" since the US hosted Middle East talks in November at Annapolis.
The former US president was criticised by the US and Israel for visiting the Syrian capital Damascus last week to meet exiled Hamas political leader Khaled Meshaal.
But he defended his visit on Monday, telling Israel's Council on Foreign Relations: "The problem is not that I met with Hamas in Syria. The problem is that Israel and the United States refuse to meet with someone who must be involved."
Mr Carter said Hamas had reiterated its position that it would accept an Israeli state within its pre-1967 borders, living in peace with Israel, if such an agreement was approved by Palestinians.
Speaking to the BBC's Newsnight programme, Mr Carter said: "Hamas indicated to us at least - I'm not guaranteeing their commitment - that if Israel is willing to have a mutual ceasefire and a renunciation of violence in Gaza and in the West Bank, they will accept it, and as a first step they would even accept just limiting that to Gaza.
"So I think that what they have said, if they were honest and we wrote it out so there wouldn't be a mistake, it's a very significant development."
Israel, the US and the European Union regard Hamas, which controls the Gaza Strip, as a terrorist organisation.
Hamas is officially dedicated to the destruction of Israel and the creation of an Islamic state in Israel, the West Bank and Gaza.
Shalit deadlock
Mr Carter also said that the release of the Israeli soldier Gilad Shalit, captured by Hamas and other militant groups during a raid into Israel two years ago, was being held up by the lack of direct communication between Israel and Hamas.
Mr Carter said the difficulty was in agreeing the identity of the Palestinian prisoners to be released in return.
He said Egyptian officials had told him that Israel had agreed to release 1,000 prisoners, in principle.
However, it had accepted only 71 names on a list of hundreds of prisoners submitted by Hamas.
Mr Carter also said Hamas had agreed to let Cpl Shalit send a letter to his parents.
Investigation
Meanwhile, Israel said it would investigate the death of Palestinian Reuters cameraman Fadel Shana, who died with several other civilians in Gaza last Wednesday.
New York-based Human Rights Watch says it has evidence an Israeli tank team fired either recklessly or deliberately at Mr Shana.
The final footage taken by Mr Shana - and released by Reuters - shows the tank firing in his direction. The Israeli army denies deliberately targeting civilians.
Israeli Human rights group B'tselem has reported that Mr Shana was killed by a "flechette" shell.
The shell is an anti-personnel weapon that explodes in the air and releases thousands of small metal darts over a wide area.
The group called on the Israeli Army's judge advocate general to order the immediate cessation of the use of the shell and open a criminal investigation of the event. The group says the weapon is prohibited.
from bbc.co.uk
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An update: Hamas' exiled leader has said it will not accept Israel's right to exist but would offer a 10-year truce if Israel withdrew to its 1967 borders. Here is a link to the story:
http://news.bbc.co.uk/2/hi/middle_east/7359661.stm
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