Yuval Steinitz, minister responsible for international relations, said it would involve "heavyweight prisoners in jail for decades".

Mr Kerry announced on Friday that initial talks would be held in Washington "in the next week or so".

The Israeli minister's remarks are the first details of the deal.

Mr Kerry had declined to tell reporters in Amman what the two sides had agreed to, saying that the "best way to give these negotiations a chance is to keep them private".

The agreement came at the end of four days of frenetic shuttle diplomacy, on Mr Kerry's sixth visit to the region in the past few months.

Mr Steinitz told Israeli public radio that the agreement adhered to the principles set out by Prime Minister Benjamin Netanyahu for kick-starting the talks.

The release of prisoners would take place in stages, he said.

According to Israeli human rights group B'Tselem, 4,817 Palestinians are held in Israeli jails. The release of prisoners held before the 1993 Oslo peace accords has been a long-held Palestinian demand.

For their part, the Palestinians had committed themselves to "serious negotiations" for a minimum of nine months, said Mr Steinitz, who is a member of the prime minister's Likud Beiteinu party.

But he made clear that Israel had not accepted Palestinian pre-conditions, including a halt to settlement construction in the occupied West Bank and East Jerusalem.

"There is no chance that we will agree to enter any negotiations that begin with defining territorial borders or concessions by Israel, nor a construction freeze."

Israel and the Palestinians last held direct talks in 2010, which were halted over the issue of settlement-building.

Settlements are considered illegal under international law, although Israel disputes this.