An agreement to release Israeli hostage Arbel Yehud has been reached that would allow people to return to north Gaza, a senior Palestinian Islamic Jihad official has told the BBC, after a dispute over her release caused a delay.

The source said she would be freed on Friday in exchange for the release of 30 Palestinian prisoners serving long-term and life sentences.

The deal would pave the way for thousands to go to north Gaza on Sunday night or Monday morning.

Israel has not yet confirmed if a deal has been reached.

On Saturday, Hamas freed four Israeli female soldiers held hostage since 7 October 2023 in return for 200 Palestinian prisoners. Ms Yehud, a civilian, was set to be freed first.

Israel accused Hamas of breaching its ceasefire agreement and said it would continue to block the route to northern Gaza because she was not released.

Thousands of displaced Palestinians attempting to reach northern Gaza gathered at the military barrier blocking their progress.

Images showed massive crowds waiting to pass the Netzarim Corridor, a road which separates north and south Gaza and is controlled by Israeli troops.

Nirmeen Musabeh, 42, travelled from Deir al-Balah in central Gaza, but was displaced from her home in Shejaiya, in the south.

“We’re sleeping in the streets,” she told the BBC at the checkpoint.

“We can’t go home and every time we try to go home they shoot at us.”

Diab Shehbari said on Sunday that she had been at the checkpoint since 20:30 local time (18:30 GMT) on Saturday.

“We slept here. All night the kids were screaming because of the cold – we lit a fire and covered them,” he said.

He wants to return to Jabalia to see his sons and bury the dead.

“I expect to see destruction,” he said.

“People are saying that with the level of destruction, there are no landmarks remaining. I want to see this with my own eyes.”

There were some chaotic scenes on Saturday evening as Palestinians who had expected to be able to walk north following the completion of the hostage release found the road was still blocked by Israeli tanks.

As crowds gathered along al-Rashid road in central Gaza to return home, gunshots were reportedly fired.

In one video posted online, which BBC Verify has confirmed was filmed on that road, people could be seen panicking and four gunshots could be heard.

In a separate incident, Reuters news agency, citing the Hamas-run health ministry, and Palestinian media reported one person was killed and others injured.

The Israel Defense Forces (IDF) said troops in central Gaza had fired shots after “several gatherings of dozens of suspects were identified who posed a threat to the forces”.

A statement continued: “Contrary to reports emerging in recent hours, all of the shooting in the area was carried out for the purpose of distancing and not aimed at harm. We emphasise that as of this stage, no injuries to the suspects are known to have occurred as a result of the shooting.”

Under the terms of the ceasefire agreement, Palestinians had been scheduled to be allowed to travel north of the Netzarim Corridor, a seven kilometre (4.3 miles) strip of land controlled by Israel that cuts off north Gaza from the rest of the territory.

Qatari and Egyptian mediators who have facilitated talks between Israel and Hamas have made progress in their efforts to allow hundreds of thousands of Palestinians to return to the north.

Israel had asked the mediators for proof from Hamas that Ms Yehud is alive and it appeared that had been given to the Egyptians by Saturday evening, the BBC understands.

Meanwhile, many Gazans were watching anxiously for any breakthrough that could allow them to return.

For many, the hope of returning outweighs the reality of what awaits them: ruins and destruction.

Yet the dream of reclaiming their lives, rebuilding their homes and reuniting with their families are keeping their spirits alive.