Olmert's offer follows the release of 1,000 Palestinians in recent months and is notwithstanding Palestinian rocket attacks on Israel in recent days that followed Israeli military incursions into Gaza, The Daily Telegraph reported. More than 9,000 Palestinians are in Israeli jails, many held without trial, the British newspaper noted.
The planned prisoner release was announced following a trip to Israel and the West Bank by British Foreign Secretary David Miliband, who met with Abbas, the president of the Palestinian national authority.
The back-and-forth attacks between the Palestinian and Israeli forces has severely strained the five-month cease-fire between the two sides, Miliband said.
"It is vital that the cease-fire is maintained," Miliband said in Ramallah after meeting with Abbas.
Israeli Defense Minister Ehud Barak has said Israel is prepared to attack Gaza if deemed essential to protect the nation.
"There is always a need to consider the wider picture before Israel starts using its immense military force,'' he told American Jewish leaders in Jerusalem.
Olmert is to leave his post after a Feb. 10 general election.