"Hamas is making a miscalculation that time is on their side. It is not", says US Middle East envoy Steve Witkoff in a statement.
The issue concerns the Israeli-American soldier Eden Alexander and four dead hostages who also hold dual citizenship, according to Hamas.
The release is said to be part of a proposal to extend the first phase of the ceasefire until mid-April, which Hamas has received from American mediators. Hamas is then to release the hostages in exchange for Palestinian prisoners.
According to the statement from Steve Witkoff, Hamas has been "informed with all desirable clarity" that there is a near deadline for the hostage deal and that it must include Eden Alexander.
Hamas has shown "flexibility" outwardly but has behind the scenes come up with demands that are "completely impractical without a permanent ceasefire", according to the American statement.
Israel's Prime Minister Benjamin Netanyahu rejects the Palestinian initiative, reports Haaretz. Hamas has not "budged an inch" in the ceasefire negotiations, claims Netanyahu and accuses the movement of manipulation and psychological warfare.
According to the Prime Minister's office, Israel's delegation at the Gaza talks in Qatar returns to Israel tomorrow, whereupon the security cabinet will gather to discuss the latest developments.