Israel has freed a further 73 Palestinian prisoners in what, it says, is a gesture to the US-backed peace plan for the Middle East.
Palestinians are not happy with Israel's 'good will gestures'
A fleet of buses took the prisoners to checkpoints in the West Bank and Gaza strip.
The release was delayed by three days following two suicide bombings on Tuesday in which two Israelis died.
But Palestinian officials have criticised Friday's release saying the prisoners were jailed for crimes like theft rather than any type of militant activity.
A group of about 330 Palestinian prisoners were freed on 6 August but there are around 6,000 Palestinians detained in Israel for alleged militant activity.
Nearly 100 others are charged with criminal offences or entering Israel illegally.
'Bad will gesture'
A spokesman for the prison service said the prisoners were convicted of offences like car theft or illegal entry into Israel.
"I was to have been released in 15 days anyway," one of the freed men, Jadallah
Ibrahim Sawarqa, said as he left a prison bus at a checkpoint.
"What about the people who have been jailed for many years?"
Rajai Yunis Tbakhi, 24, who served just under six months of a
seven-month sentence for entering Israel without a permit, said: "I wish all the prisoners whom I left behind could come
out and live free as I am, starting today."
Abdel Aziz al-Rantissi,
of the militant group Hamas, said: "This is a gesture of bad will."
"What's needed is the release of all political detainees and not just dozens of criminal ones."
The dispute over prisoner releases has become one of the main obstacles blocking progress with the US-backed roadmap peace plan, even though the issue of prisoner releases is not part of its terms.
The Israeli army has continued to arrested suspected militants - with nine being held in West Bank raids on Thursday night.
Israel defends its right to do so until Palestinian authorities start disarming militant groups.
"If the Palestinian Authority does not take care of the terrorists we will have to continue to do it ourselves," Israeli Prime Minister Ariel Sharon said in an interview
with the Italian daily La Repubblica.
"But I have only one political wish: to move forward with the road
Friday's releases came a day after Israeli forces killed the leader of Islamic Jihad in the West Bank
city of Hebron.
The group has vowed to avenge the killing of Mohammed Sidr, who Israel had described as a "ticking bomb".
Security chiefs from both sides held a four-hour meeting on Thursday to discuss an Israeli withdrawal from more West Bank towns.
But the meeting, between Palestinian security chief Mohammed Dahlan and Israeli Defence Minister Shaul Mofaz, ended without agreement.