Hamas rally in Gaza
Hamas rally in GazaAbed Rahim Khatib/Flash 90

Hamas on Wednesday denied reports in Israeli media about negotiations on a new prisoner exchange deal to return the bodies of Israeli soldiers and civilians held in Gaza.

"The statements published by the office of the Prime Minister of the Occupation, Binyamin Netanyahu, are lies directed at his people and intended to cover up his failure to manage this issue," the terrorist group said in an official statement.

The Hamas statement came in response to officials in Netanyahu's office who were quoted by the Israel Hayom newspaper as saying that progress had been made in negotiations over an exchange deal.

Hamas has been holding the bodies of IDF soldiers Hadar Goldin and Oron Shaul since the 2014 Operation Protective Edge.

In addition, two Israeli civilians who went missing in Gaza - Avera Mengistu and Hisham al-Sayed - are believed to be held by Hamas as well.

The Red Cross has in the past urged Hamas to comply with its obligations under international humanitarian law and provide an update on the condition of Israeli nationals who went missing in Gaza.

Hamas has refused to comply with the request, and has also refused to allow the Red Cross to visit the missing Israelis.

Last week, Hamas leader Ismail Haniyeh said the group was ready to negotiate with Israel on an exchange deal.

On Tuesday, however, Israel Hayom reported that a dispute has broken out within the higher echelons of Hamas that is preventing the terror organization from reaching an exchange deal.