Jerusalem: The five-year ordeal of Israel's abducted soldier Gilad Shalit came to an end on Tuesday as his captors, Hamas militants, handed him over to Egyptian authorities, bringing huge relief to the Jewish state.

Shalit was passed into Egyptian custody under a prisoner exchange deal, which set in motion the release of 477 Palestinian prisoners by Israel.

The historic first ever prisoner swap between Israelis and the radical Palestinian group took place at the Rafah crossing and got underway when a SUV filled with armed men sped into Sinai from Gaza to hand over Shalit to Egyptians before zipping back across the border.

"Shalit was transfered to Egypt by Hamas and an Israeli doctor was checking his state of health," Egyptian officials said. The officials said that the Israeli prisoner would be transferred to Israel later in the day.

His transfer to Egypt set in motion the release of 1,027 Palestinian prisoners in a long-awaited deal signed last week.

Timed with Shalit's handover, buses carrying the first batch of 477 prisoners headed for Gaza and the West Bank.

Israelis waited with bated breath for the homecoming of Shalit, who has become the first Jewish prisoner to return home alive in 26 years. The buses carrying Palestinian prisoners began their journey across Israel's border with Egypt and into the West Bank, a kind of confirmation that the Israel Defence Forces (IDF) soldier in fact has passed out of Hamas control as per the deal.

All the 477 Palestinian prisoners to go free in this round of swap were transferred to locations on the Gaza border, in the West Bank and, in the case of the Israeli Arab prisoners included in the deal, East Jerusalem.

As dawn broke, the first convoy of prisoners from Ketziot prison arrived at Ofer jail, near the West Bank city of Ramallah, and a short time later another convoy of prisoners, also from Ketziot, arrived at the Kerem Shalom crossing, where they were to be delivered to Gaza via Egypt.

The prisoners were to be taken off the buses and identified at Kerem Shalom before being handed over to Red Cross officials who would transfer them to Egyptians.

The last legal obstacle to the release of Shalit was effectively removed yesterday evening after the Israeli Supreme Court rejected petitions opposing the swap deal.

The petitions were filed by families of terror victims who were killed in attacks planned, ordered and/or perpetrated by some of those being freed in the deal.

Senior Hamas leader, Mahmoud Zahar, who was one of the negotiators in the Gilad Shalit swap deal, has said that Israel agreed to various other conditions in exchange, including lifting of blockade on Gaza Strip.

"Israel agreed to this long ago, in talks with a German mediator, and it is still part of the agreement," Zahar told Ha'aretz.

Zahar said that there were several other issues the two sides agreed to as part of the deal like lifting of ban on prison visits by families in Gaza and removing Palestinian leaders jailed in Israeli prisons from solitary confinement.

After Shalit's release, Israel will no longer have any excuse to continue the blockade, Zahar told a Israeli daily.

"This is what representatives of European countries told us when they approached us about releasing Shalit, and the Israelis made this commitment as well," he said.

Israel from time to time has eased restrictions over goods entering the coastal enclave, under international pressure, but the complete lifting of Gaza blockade looks difficult when the Jewish state has been accusing Hamas of smuggling weapons to be used against it and has also forcefully prevented foreign ships trying to end Gaza's isolation.

Meanwhile, preparations for receiving the released Palestinian prisoners in Gaza have already been completed, including construction of a big stage for the main ceremony in the centre of Gaza City.

Hundreds of members of Hamas' military wing were deployed along the entire length of the road that runs from the Rafah crossing, on the Gaza-Egypt border, to Gaza City, since the prisoners will arrive at Rafah via Egypt.

The Rafah crossing area has been declared a closed military zone and only 100 VIPs will be allowed entry.