Palestinian leader Mahmoud Abbas denies that talks to free an Israeli soldier held by Palestinian militants in the Gaza Strip have reached an impasse, saying mediation efforts are continuing.
Three militant groups kidnapped 19-year-old Corporal Gilad Shalit on June 25 in an attack on an Israeli guard post.
The groups have issued a statement demanding the release of 1,000 Palestinian prisoners from Israeli jails in exchange for the release of the Corporal.
However, Israel has refused to do a prisoner swap.
Mr Abbas, who has been in around-the-clock talks with the Hamas Government, says the talks are not deadlocked.
"Things have not reached an impasse and efforts continue to find a solution that is acceptable to all parties and resolve the issue of the prisoner in exchange for some things," he said.
"People are looking for a satisfactory solution and hopefully we will get that solution."
Mr Abbas did not elaborate on what Israel would have to give the militant groups to secure the Corporal Gilat's release.
Mark Regev, a spokesman for the Israeli Foreign Ministry, says the Palestinians can resolve the crisis by releasing Corporal Shalit.
"What is progress? Progress is when our servicemen is set free, allowed to come home, return to his family and our military operation therefore becomes superfluous," he said.
"But we can't say we're there yet. We'd like this to end peacefully, we'd like the Palestinians to make the right choices and prevent this crisis from getting any worse."