Israel and Hamas have agreed to the first phase of a peace plan, paving the way for a possible end to the conflict in Gaza.

Under the plan, Hamas will release the 20 living hostages it is still holding, while Israel will withdraw its troops to an agreed line and free nearly 2,000 Palestinian detainees, sources told the BBC.

World leaders, Palestinians and Israelis have welcomed the news – but details remain sparse and crucial further steps, such as who will govern Gaza, are still to be discussed.

The long-awaited breakthrough raises hopes for a lasting peace in a conflict that has lasted two years and two days, and cost tens of thousands of lives.

Israeli Prime Minister Benjamin Netanyahu said it was “a great day for Israel” and said he would convene his cabinet on Thursday to approve the agreement.

If approved, a ceasefire will go into effect immediately after the meeting, which will take place at around 14:00 local time (12:00 BST), a senior Palestinian official told the BBC.

Israel will allow 400 aid trucks to enter Gaza daily during the first five days, with the number to increase gradually in later stages, they said.

Hamas confirmed that the agreement included an Israeli withdrawal from parts of Gaza and the entry of aid into the Palestinian territory. It called on US President Donald Trump to ensure Israel complies.

A senior White House official told the BBC’s US partner, CBS News, that the withdrawal of Israeli troops would likely take less than 24 hours.

Once that is complete, Hamas will have 72 hours to release the hostages the armed group took from Israel when it staged its 7 October 2023 attack who are still in Gaza.

Hostages could be released as soon as Monday, according to US President Donald Trump, who was the first to announce that an agreement had been reached.

What Hamas and Israel have agreed to following three days of indirect talks in Egypt is largely the first portion of a 20-point peace plan Trump proposed at the end of September.

A Palestinian official said the “yellow line” that Israeli troops would withdraw to under Trump’s plan had been adjusted to reflect Israel’s security requirements and Hamas’s need to secure the release of Israeli hostages.

The line initially proposed by the White House would have left Gaza about 55% occupied by Israeli forces.

Hamas officials told the BBC that the list of prisoners it had submitted to mediators in Egypt for Israel to release included high-profile figures such as Marwan Barghouti, seen by many Palestinians as a future president. It is unclear whether Israel has agreed to his release.

But there remains few details about what else has been agreed.

The tentative deal reached on Wednesday night is also not a comprehensive agreement – meaning other key sticking points, including the disarmament of Hamas and the future governance of Gaza, are still to be negotiated.

Trump’s plan proposes a temporary transitional government led by a international committee and overseen by Trump and former UK Prime Minister Sir Tony Blair.

Hamas would be barred from any role in Gaza and there is an expectation that the Palestinian Authority, which governs the West Bank, would eventually take over.

Netanyahu and Trump congratulated each other on the “historic achievement” during a “moving” phone call, according to the Israeli prime minister’s office.

Later, Trump told Fox News that the agreement would usher in a “different world”.

Israeli President Isaac Herzog said: “At this moment the heart of Israel beats as one with the hostages and their families.”

UN Secretary General António Guterres described the agreement as a “momentous opportunity”, adding that the UN will support the “full implementation” of the deal, increase its delivery of humanitarian aid and advance its reconstruction efforts in Gaza.

There were celebrations in Israel and Gaza following news of the deal – though some are still treating it with understandable caution.

In Tel Aviv’s Hostage Square, the families of the remaining hostages set off fireworks and cheered.

Avishai David, the father of Israeli hostage Evyatar David, said he felt “tremendous excitement, even though for now it’s only on paper”.

He added: “I want to see him, feel him, touch him. Only then will I know it’s real, because everything can still change.”

Hamas is holding 48 hostages in Gaza following releases during an earlier ceasefire, 20 of whom are still thought to be alive.

Palestinians in Gaza took to the streets on Wednesday night, cheering and whooping over the announcement.

Mousa, a doctor in Deir al-Balah in central Gaza, told the BBC: “We have lost a lot during the two years of war. The Gaza Strip is destroyed. A difficult time still awaits us, but the important thing is we hope to be safe.”

Provided negotiators can continue to find accord over the outstanding points of contention, Wednesday’s agreement could be the first step toward ending a bloody and destructive war.

The Hamas-led attack on 7 October 2023, which sparked this latest phase of the decades-long Israel-Palestine conflict, saw 1,200 people killed and 251 taken as hostages.

Israeli forces have since killed at least 67,183 people, including 20,179 children, according Gaza’s Hamas-run health ministry. Its figures are seen as reliable by the UN and other international bodies.

The ministry has said another 460 people have died from malnutrition, including 182 since a famine was confirmed in Gaza City in August by the UN-backed Integrated Food Security Phase Classification (IPC). Israel has restricted aid deliveries it says were being taken away from civilians by Hamas fighters.

Netanyahu has repeatedly denied starvation is taking place in Gaza and said Israel was facilitating deliveries of food and other aid.

In September, a UN commission of inquiry said Israel had committed genocide against Palestinians in Gaza. Israel categorically rejected the report as “distorted and false”.