Israel has freed 26 Palestinian prisoners ahead of renewed Mideast negotiations.

Israelis and Palestinians are to hold talks in Jerusalem tomorrow, following a preparatory round two weeks ago in the United States.

Follow-up meetings are expected every few weeks in various venues in pursuit of US Secretary of State John Kerry's goal of clinching an accord in nine months.

The prisoner release is part of an agreement to restart the talks after a five-year freeze.

Few expect the latest negotiations to resolve issues that have defied solution for decades, such as borders, settlements, the status of Jerusalem and the right of return for Palestinian refugees.

Yet neither Israeli Prime Minister Benjamin Netanyahu nor Palestinian President Mahmoud Abbas want to be seen as putting the brakes on the US peace drive.

"We set ourselves nine months during which we will try to get to something with the Palestinians," Israeli Defence Minister Moshe Yaalon told reporters.

"We have been trying in the 20 years since Oslo (interim peace accords), during 120 years of conflict. You can hear the hint of scepticism in my words, but we have decided to give it a chance."

The 26 men released were the first batch of 104 Palestinians serving long jail terms, many for deadly attacks on Israelis.

They have now won amnesty in a move that may improve Mr Abbas's domestic standing, despite his having dropped demands to condition peace talks on a halt to settlement building.

In the past few days, Israel has announced plans to increase its settlement of the West Bank and East Jerusalem, which, along with Gaza, the Palestinians want as part of their state in any deal.

Most world powers say the settlements are illegal.

Israel sees them as a security bulwark and the realisation of a Jewish right to biblical land, and insists on keeping swathes of them under any eventual peace accord.

Nearly 600,000 Israelis live in the West Bank and East Jerusalem, among 2.5 million Palestinians.

Israel has published plans for 3,100 new settler homes in recent days alone.