A senior Palestinian Authority (PA) official said a release by Israel of imprisoned Arab terrorists would not go ahead on Saturday as envisaged but he hoped there would only be short delay.
"Today the prisoners will not be released... maybe in the coming days," Issa Qaraqae, the minister of prisoner affairs, told AFP.
"There are efforts to solve the crisis and I believe that in 24 hours everything will be clearer."
Under the deal that relaunched peace talks last July, Israel agreed to release 104 convicted terrorists held since before the failed 1993 Oslo peace accords in exchange for the PA not pursuing unilateral measures at the United Nations. This, despite such unilateral moves being in breach of previous agreements, including Oslo.
So far, Israel has freed 78 prisoners in three batches - most of whom were jailed for murdering Israelis - but ministers had warned they would block the final release, which had been anticipated for Saturday, if the Palestinian Authority refused to extend the talks beyond their April 29 deadline.
The release, intended as a "gesture" to promote the stalled peace talks, has been widely protested in Israel, particularly by the families of Israelis murdered in terrorist attacks. Deputy Defense Minister Danny Danon threatened to resign if the move went through.
Much of the objection to the fourth release came after the PA chief negotiator, Saeb Erekat, admitted earlier this month that PA Chairman Mahmoud Abbas was staying in talks solely for the sake of the terrorist releases.
Palestinian president Mahmoud Abbas has not spelled out his terms for prolonging talks, saying only that he is not even prepared to discuss the issue until the prisoners are freed.
And an unnamed PA official claimed last week that Abbas' conditions for prolonging talks were additional prisoner releases by Israel and a complete building freeze in Jewish communities in Judea and Samaria.
There has been no official Israeli update on the last batch of prisoners. The PA wants it to include Arab Israeli citizens, a demand hotly opposed by the Israeli government.
An Israeli official, speaking on condition of anonymity, told AFP that Israel was willing to free the prisoners but the Palestinians were placing obstacles in the way.
"Israel is interested in continuing the peace talks with the Palestinians and is prepared to carry out the fourth stage of the release of convicted terrorists," he said.
"But the Palestinians are creating difficulties with this when they say that the moment after the release of the prisoners they will stop the talks."
He did not elaborate.
Palestinian official Jibril Rajoub told AFP Friday that Israel informed the PA that the last batch of prisoners would not be released on Saturday.
Rajoub said this would be a "slap in the face of the US administration and its efforts," adding the PA would resume its "international diplomatic offensive" against Israel as a consequence.
"Not releasing the prisoners will mark the beginning of the efforts in the international community to challenge the legality of the occupation," he said.
Prisoner release 'crucial' issue
A poll published Saturday by the Palestinian Centre for Public Opinion said 87 percent of those surveyed believed the Palestinian Authority should renew its UN efforts if the prisoners are not freed.
The prisoner release "is a prerequisite for any future progress of the negotiations," the center said, as the overwhelming majority of Palestinian Arabs consider it to be "the most crucial issue that must be treated in order to continue with the peace process."
The talks have been teetering on the brink of collapse, with Washington fighting an uphill battle to get the two sides to agree to a framework for continued negotiations until the end of the year.
US Secretary of State John Kerry met Abbas in Amman on Wednesday in a bid to salvage the talks, with US special envoy Martin Indyk meeting Abbas in Ramallah a day later.
On Friday, State Department spokeswoman Jen Psaki denied reports that negotiations had already collapsed.
"Any reports that suggest the talks are off are inaccurate," she said.
"Ambassador Indyk and the negotiating team remain closely engaged with both parties on the ground and will continue to work over the coming days to help them bridge the gaps and determine the path forward."
Israeli media say Netanyahu could give a green light to the prisoner release if the US frees Jonathan Pollard, who was arrested in Washington in 1985 and condemned to life imprisonment for spying on the United States for Israel.
Israel is not commenting on such reports, with Netanyahu spokesman Mark Regev saying only that in general the spy's fate is "often raised at high-level meetings between Israelis and Americans."
On Wednesday, Psaki said "there are currently no plans to release Jonathan Pollard."