Prime Minister Ehud Olmert made the pledges at a summit in this Egyptian Red Sea resort with Abbas and the leaders of Egypt and Jordan.

The Arab leaders hope the high-profile gathering can lead to a resumption of the long-blocked peace process, rally Palestinian support behind Abbas and isolate Hamas after the Islamic militant group's stunning and bloody victory in Gaza.

Hamas' new power has raised fears the Mediterranean coastal strip will become a breeding ground for extremism, and a series of messages released by militants ahead of the summit underlined the turmoil swirling around Gaza.

Hamas-linked militants holding an Israeli soldier for the past year released an audiotape of him urging Israel to strike a deal for his release. A British journalist kidnapped in Gaza appeared in a video wearing an explosives belt that his captors threatened to detonate if security forces try to free him. And al-Qaeda's deputy leader tried to woo Hamas into an alliance and called on Muslims to attack American and Israeli interests in support of the group.

Abbas told the Sharm el-Sheik gathering, "It is time to relaunch the peace process" to tackle the toughest, central issues of the Israeli-Palestinian conflict.

"Despite the bloody coup in Gaza, we are still determined to work relentlessly to achieve the independence and the freedom of our people," he said. "My hand is extended to work together with the Israelis on the basis of the Arab peace initiative, President Bush's vision of two states, international resolutions and the signed agreements."

Olmert did not promise an immediate resumption of peace negotiations, but said the steps he was announcing aimed to prepare the ground for them. "I don't intend to let this opportunity pass," the Israeli said, adding that he "told Abbas that we will work with the new government and maintain frequent meetings with it."

The prime minister announced the prisoner release and a series of steps aimed at easing the situation in the West Bank, where Abbas' Fatah faction and the new emergency government he set up hold sway. He promised to "substantially" improve freedom of movement in the West Bank by easing roadblocks and other security measures and reopening trade ties with the territory.

"The residents of the West Bank will feel that choosing the path of no terror or violence, the way of peace and dialogue will bring a better, more comfortable, more peaceful life," Olmert said.

He said the release of 250 Fatah prisoners "who do not have blood on their hands" was meant as "a gesture of goodwill toward the Palestinians." Olmert spokeswoman Miri Eisin said the prisoners would be freed within 48 hours of Cabinet approval Sunday.

The release would be the largest since February 2005, when Israel freed 500 after a summit in Sharm el-Sheik also aimed at bolstering Abbas, who had just won election as Palestinian president.

Palestinian officials suggested the new release was not as much as they had hoped. "We have more than 10,000 prisoners in Israeli jails. So we want a real and practical release," said Abbas aide Saeb Erekat.

Erekat said that during private meetings at the summit, Olmert had made a pledge to Abbas to "restore the situation in the West Bank to what it was before the Intifada" the outbreak of violence in 2000 that led to Israel sending troops back into parts of the West Bank it had handed over to the Palestinians under earlier peace deals.

On Sunday, Olmert's Cabinet approved the release of tax funds Israel had refused to hand over to the Palestinians since Hamas swept Palestinian parliamentary elections in January 2006. Israel is holding $550 million in frozen funds, but the Cabinet decision did not say how much would be released, or when.

Olmert also promised to allow food and electricity into Gaza, aiming to prevent a worsening humanitarian crisis there that could increase the strip's turmoil.

In a reflection of the worries that taking too hard a line with Hamas could push it deeper into extremism, Egyptian President Hosni Mubarak spoke of reopening talks between Hamas and Fatah for the first time since the Gaza takeover. He said a "return to dialogue" was "an urgent necessity that can't wait."

Deposed Palestinian Prime Minister Ismail Haniyeh, of Hamas, said he was ready to resume talks "immediately." But so far, Abbas has refused contacts with the militant group.

The Sharm el-Sheik summit comes a day ahead of a gathering in Jerusalem of the Quartet of Mideast negotiators the United States, Russia, the European Union and the United Nations. The hope is that the meeting in Egypt could lead to more in-depth international efforts to prod peace talks that broke down amid violence in 2001.

At the same time, momentum is growing for outgoing British Prime Minister Tony Blair to be named as an international envoy for the Middle East. The Financial Times newspaper reported Monday that the Quartet members had agreed to confirm his appointment at their Jerusalem gathering.