Israeli Prime Minister Benjamin Netanyahu declared on Tuesday the ceasefire in Gaza would end and the military would resume fighting Hamas until it was defeated if the Palestinian militant group did not release hostages by midday on Saturday.

Following Netanyahu's ultimatum, Hamas issued a statement renewing its commitment to the ceasefire and accusing Israel of jeopardising the ceasefire.

The Israeli announcement came after Netanyahu met with several key ministers, including defence, foreign affairs and national security, who he said gave the ultimatum their full support.

After nearly 16 months of war, Hamas has gradually been releasing hostages since the first phase of a ceasefire began on January 19, but on Monday said it would not free any more until further notice over accusations Israel was violating the deal.

"If Hamas does not return our hostages by Saturday noon – the ceasefire will end and the IDF (military) will return to intense fighting until Hamas is finally defeated," Netanyahu said.

It was not immediately clear if Netanyahu meant Hamas should release all hostages held in Gaza or just the three who had been expected to be released on Saturday under the ceasefire.

So far, 16 of 33 hostages have been freed as part of the ceasefire deal's first phase that is due to last 42 days. Five Thai hostages were also let go in an unscheduled release.

In exchange, Israel has released hundreds of Palestinian prisoners and detainees, including prisoners serving life sentences for deadly attacks and others detained during the war and held without charge.

There are thought to be 76 hostages still held in Gaza, more than 35 of them believed to be dead, according to Israeli media. (Reuters)