Gaza City (Palestinian Territories) (AFP) – Hamas said it would release a US-Israeli hostage held in Gaza as the group revealed it was engaged in direct talks with the United States towards a ceasefire in the war-battered territory.

"Israeli soldier Edan Alexander, a dual US national, will be released as part of efforts towards a ceasefire" and the reopening of aid crossings, the Palestinian militant group said in a statement.

The family of 21-year-old Alexander said they had been informed that he might be released "in the coming days".

Earlier, two Hamas officials told AFP that talks were ongoing in the Qatari capital of Doha with the United States and reported "progress" had been made.

Israeli strikes meanwhile continued, with Gaza's civil defence agency reporting that at least 12 people were killed on Sunday including four young children.

One Hamas official, speaking of the talks with the United States, said there was "progress made... notably on the entry of aid to the Gaza Strip" and the potential exchange of hostages for Palestinian prisoners in Israeli custody.

A second official also reported progress "on the ceasefire in the Gaza Strip".

Israel again vowed to keep fighting despite the talks.