The US State Department announced that preliminary talks between high-level envoys from both sides would begin Monday in Washington.
"Both leaders have demonstrated a willingness to make difficult decisions that have been instrumental in getting to this point. We are grateful for their leadership," US Secretary of State John Kerry said in a statement.
In a bid to enable negotiations to resume after three years of stagnation, Prime Minister Benjamin Netanyahu on Sunday sought and won Cabinet approval for the contentious release of the prisoners.
Chief Palestinian negotiator Saeb Erekat welcomed the decision.
"I believe this is a step toward peace and I hope that we can use this opportunity that the US has provided for us to resume negotiations," he said.
The Cabinet voted 13-7 with two abstentions in favor of Netanyahu's controversial proposal. Relatives of those killed in Palestinian attacks, meanwhile, protested outside Netanyahu's office (pictured above).
The decision came following a US-brokered push to get the two sides back to the negotiating table and foresees the release of the prisoners over a period of several months, in four stages, with each stage linked to the progress made in the negotiations.
A few hours after the vote, negotiators from both sides were invited to resume talks in Washington on Monday and Tuesday, the US State Department announced.
Emotions run high
The move has stirred emotions on both sides, because the prisoners in question are viewed as heroes by many Palestinians, and as criminals and terrorists by many Israelis. When Netanyahu asked the Cabinet to consider the proposal, he spoke of the difficulty of the decision.
"This is not an easy moment for me, and is not easy for the ministers in the government and is especially difficult for the bereaved families," Netanyahu said.
"But there are moments where I need to make tough decisions for the good of the country, and this is one of those moments."
He went on to say that the upcoming talks were important to Israel and that any accord reached in the negotiations would be put to a referendum in the country.
tm,hc/ch (AP, dpa, AFP, Reuters)