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One of those released was a Palestinian who served a lengthy sentence for the murder of an Israeli taxi driver.

Appeals by terror victims and their families not to let the Palestinians go free were rejected by the Israeli Supreme Court.

Previously, Israel has released only Palestinians who have been convicted of killing other Palestinians and steadfastly refused to free those who murdered Jews. This week's release marked the first indication that Israeli Prime Minister Ehud Barak is willing to relax that restriction.

Meir Indor, chairman of a group called the Victims of Terror Association, accused the Israeli court of "accepting the rights of terrorists and ignoring the rights of the victims."

The prisoners released last week were from eastern Jerusalem, marking the first time residents of the predominantly Arab part of the capital were included in a prisoner release as part of the peace accords.

In another development, Israeli police removed Jewish settlers from a West Bank hilltop, where they had threatened to establish an enclave to prevent an Israeli withdrawal in the area.

The settlers had set up tents at the site of a former army base that had been moved in preparation for a future Israeli withdrawal. Most of the more than 150 settlers detained by police were eventually released.