A new 24-hour ceasefire came into effect in the Gaza Strip Tuesday after Israeli and Palestinian negotiators agreed  to extend a five-day truce, minutes before a midnight deadline, to allow for further talks on a long-term deal.

News of the last-minute extension came from Cairo late Monday where Egyptian mediators have been pushing both sides to put a decisive end to weeks of bloodshed in Gaza, which has killed more than 2,000 Palestinians and 67 on the Israeli side.

The announcement was confirmed by both sides just minutes before the five-day ceasefire was to expire at midnight local time (2100 GMT Monday).

"Both sides have agreed to a 24-hour ceasefire," a senior Palestinian official told AFP in Cairo.

Israel also confirmed accepting the extension to allow talks on a longer-term deal to continue for another 24 hours.

"In response to an Egyptian request, Israel agreed to extend the truce for

24 hours in order to continue the negotiations" for a more durable ceasefire, a government official said.

The talks in Cairo centre on an Egyptian proposal that meets some of the Palestinian demands, such as easing Israel's eight-year blockade on Gaza, but defer debate on other thorny issues until later.

Hamas, which is part of the Palestinian delegation, also said it had agreed to hold fire for another 24 hours following an Egyptian request.

"The negotiations have faced difficulties because of the occupation's obstinacy, and the 24 hour (extension) came as a result of a request by the mediators to have another chance," Hamas politburo member Izzat al-Rishq wrote on Twitter.

Azzam Al-Ahmad, head of the Palestinian negotiating delegation, told reporters in Cairo; "We must take advantage of every minute in the next 24 hours until we reach an agreement or the cycle of violence will continue."

The warring parties had been faced with three choices -- reach a long-term agreement, accept a further extension or risk a resumption of the fighting, which has wreaked destruction across the densely populated Mediterranean coastal enclave.

The aim is to broker a long-term arrangement to halt more than a month of bloody fighting, although both sides have largely silenced their guns since August 4 thanks to a series of temporary truces.

Earlier, a senior member of the Palestinian delegation insisted there had been "progress" on agreeing a more durable ceasefire, with both sides demonstrating "a great degree of flexibility".

"Both delegations are now consulting with their leaderships," he added.

Hamas had repeatedly warned it would not extend the temporary ceasefire again, pressing for immediate gains that would allow it to claim concessions from Israel after the devastating four-week war, which began on July.

But a senior official within the Palestine Liberation Organisation (PLO) said the Islamist movement appeared to have changed its position following a meeting at the weekend between exiled Hamas leader Khaled Meshaal and senior Palestinian official Saeb Erakat.

"It looks like Hamas and Islamic Jihad will agree to the Egyptian paper," he told AFP.

The Egyptian proposals call for both sides to immediately cease fire, and includes provisions relating to opening the borders to allow for free movement of people, goods and construction materials, as well as a clause on regulating the financial crisis within the enclave.

But crucially, it postpones discussions on the thorniest issues, such as a port and airport in Gaza, for another month "after calm and stability returns", along with talks over exchanging the remains of two Israeli soldiers for the release of Palestinian prisoners.

As the familiar drama of the truce deadline played out, Palestinian president Mahmud Abbas was in Doha for talks with Meshaal and the Qatari emir, who is a key backer of Hamas.

Monday's deadline marked the end of the third temporary ceasefire in a fortnight.

Ahead of midnight, as uncertainty grew, Prime Minister Benjamin Netanyahu warned that Israel would hit back hard if Gaza militants resumed their fire on the south.

"We are ready for all scenarios... the army is preparing for a very strong response if the firing (of rockets) resumes," he said.

Hamas spokesman Sami Abu Zuhri responded that "Netanyahu's threats have no weight".

Israel on Sunday began implementing a series of unilateral measures, lifting a total ban on fishing to allow boats out to sea for up to three nautical miles.

As diplomatic efforts intensified, Gaza's health ministry said the death toll rose to 2,016 people with 10,196 wounded. Among the dead were 541 children, 250 women and 95 elderly men.

Separately, the Israeli army confirmed that five of its 64 dead soldiers were killed by "friendly fire". (AFP)