Prospects for a Gaza ceasefire appeared slim on Sunday as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages, and Israeli Prime Minister Benjamin Netanyahu flatly ruled that out.

The two sides blamed each other for the impasse and the Hamas delegation said it would leave Cairo truce talks on Sunday night to consult with its leadership.

In their second day of talks with Egyptian and Qatari mediators, Hamas negotiators maintained their stance that any truce agreement must end the war, Palestinian officials said.

Israeli officials have not travelled to Cairo to take part in indirect diplomacy, but on Sunday Netanyahu reiterated Israel's aim since the start of the war nearly seven months ago: to disarm and dismantle the Palestinian Islamist movement Hamas for good or else endanger Israel's future security.

The prime minister said Israel was willing to pause fighting in Gaza in order to secure the release of hostages still being held by Hamas, believed to number more than 130.

"But while Israel has shown willingness, Hamas remains entrenched in its extreme positions, first among them the demand to remove all our forces from the Gaza Strip, end the war, and leave Hamas in power," Netanyahu said. "Israel cannot accept that."

Indicating that this round of talks may soon unwind, a Palestinian official close to the mediation effort told Reuters on Sunday: "If Netanyahu doesn't change his mind, there will be no reason to stay. They can always reconvene if that changes."

"The latest round of mediation in Cairo is near to collapse," one official briefed on the talks told Reuters.

Israeli Defence Minister Yoav Gallant said Hamas did not seem to be serious about reaching a truce.

"We are observing worrying signs that Hamas does not intend to reach an agreement with us," Gallant said. "This means strong military action in Rafah will begin in the very near future, and in the rest of the Strip."

In a statement released shortly after Netanyahu's, Hamas chief Ismail Haniyeh said the group was still keen on reaching a comprehensive ceasefire that ends the Israeli "aggression", guarantees Israel's withdrawal from Gaza, and achieves "a serious" deal to free Israelis being held hostage in exchange for the release of Palestinian prisoners.

Haniyeh blamed Netanyahu for "the continuation of the aggression and the expansion of the circle of conflict, and sabotaging the efforts made through the mediators and various parties".

The war began after Hamas stunned Israel with a cross-border raid on October 7 in which 1,200 people were killed and 252 hostages taken, according to Israeli tallies.

More than 34,600 Palestinians have been killed, 29 of them in the past 24 hours, and more than 77,000 have been wounded in Israel's assault, according to Gaza's health ministry. The bombardment has devastated much of the coastal enclave and caused a humanitarian crisis. (Reuters)