Hamas has slashed the number of hostages it is willing to release during the first phase of a proposed ceasefire deal by more than half, an Israeli source close to the negotiations has revealed.

In its latest counterproposal, Hamas offered to release fewer than 20 hostages in exchange for a six-week ceasefire, more than halving the number of 40 hostages that has been the basis of negotiations for months with Israel, a significant step backwards in the talks.

A senior US administration official confirmed that Hamas is focused on those 20 for the first phase of a potential deal. The official also confirmed Hamas is telling mediators that it only has around 20 remaining hostages who are women or sick, wounded and elderly men.

Hamas also called for the release of more Palestinian prisoners in exchange for fewer hostages, the source said, as well as a higher number of prisoners serving life sentences.

The Israeli source said the latest Hamas counterproposal signals that Yahya Sinwar, the Hamas leader in Gaza, does not want a deal, seeking to exploit fissures between the US and Israel over Israeli military operations in Gaza and domestic pressure on the Israeli government.

Hamas spokesperson Basem Naim said the group had proposed “releasing (three) captured Israelis each week,” but said “no one is talking about final numbers.”

Beyond the ratio of Palestinian prisoners, Hamas is continuing to demand assurances about a permanent ceasefire, the withdrawal of Israeli troops from Gaza, and unrestricted access for Palestinians to return to northern Gaza.

“I think part of this is Hamas thinks they’re winning. Because their definition of success is survival and they’ve survived so far,” the Biden official said. “The longer the conflict has gone on the more recalcitrant Hamas has become rather than the other way around.”