Israel declared a ceasefire and started pulling back troops in Gaza on Friday, as thousands of displaced Palestinians began to make their way back to their wrecked homes.

After two years of brutal war, the families of Israel's remaining hostages in the territory were also hoping the truce -- pushed by US President Donald Trump -- would hold.

Gaza's civil defence agency confirmed that Israeli troops and armoured vehicles were pulling back from forward positions in both Gaza City and Khan Yunis.

The withdrawal of Israeli forces, that still hold around 53 percent of the Palestinian territory, set the clock running on a 72-hour deadline for Hamas to release the remaining hostages held in Gaza.

Israel, meanwhile, published the list of the 250 Palestinian prisoners it plans to release -- along with 1,700 Gazans detained since Hamas triggered the latest conflict with its attack on Israel on October 7, 2023.

As the ceasefire began, long columns of Palestinians, exhausted by two years of intense bombardment and what the UN has warned were famine conditions, began a trek from the southern city of Khan Yunis towards their shattered homes further north.

"I came since the morning... to find my home. I swear I don't know where the crossroads is or where my home is. I know that my home was levelled, but where is it?" Fidaa Haraz said in Gaza.

Under the ceasefire deal, Hamas will hand over 47 remaining hostages -- living and dead -- from the 251 abducted during the attack two years ago.

The remains of one more hostage, held in Gaza since 2014, are also expected to be returned.

Despite celebrations in Israel and Gaza and a flood of congratulatory messages from world leaders, many issues remain unresolved, including Hamas's disarmament and a proposed transitional authority for Gaza led by Trump.

Senior Hamas official Osama Hamdan told Qatar-based broadcaster Al Araby the Palestinian Islamist movement rejects the transitional authority.

Trump said the issue of Hamas surrendering its weapons would be addressed in the second phase of the peace plan. (AFP, Reuters)