Amid a cacophony of jubilant shooting, firecrackers and continuously honking car horns, Tareq Abu Sharkh, an al-Aqsa Martyrs Brigade militant who was released from jail yesterday, literally stopped the traffic as he was hugged and kissed by friends and well- wishers in the middle of a busy intersection in Hebron.

Mr Abu Sharkh, 31, was living proof that, for all the criticisms by militant factions that Israel's gesture to the new Palestinian leadership ­ the release of 500 inmates ­ was too limited, the homecoming of a prisoner is still a cause for unrestrained celebration in his local community.

He had earlier been carried shoulder-high in Hebron after his release from Israeli custody, 21 months before the end of his five-and-a-half year sentence. But Mr Abu Sharkh, who said he had been convicted of shooting at Israeli troops, warned that his release from Beersheeva jail, and that of his fellow prisoners, would not be enough to consolidate the new but fragile hopes for peace.

He said: "My happiness is mixed with pain because I still have brothers who are in prison. People say that this is a good gesture by Israel but it is a very small step. There will be no peace without releasing all the prisoners. We are bringing a message to the Palestinian Authority, that you should not forget that."

The call was echoed by Adnan Yusef Yunis Abu Tabani, released yesterday after being held without charge in "administrative detention" for suspected Hamas membership. Sporting a green Hamas supporter's baseball cap, Mr Abu Tabani said: "This is like a Palestinian wedding. But our happiness is not complete. We have left behind 7,500 prisoners, including 200 female prisoners."

Breaking into English, he added: "If peace will come to our land, Israel must release all of the prisoners."

The released prisoners were also treated to heroes' welcomes in Gaza and several cities across the West Bank, but in a village close to Jenin they were overshadowed when a 30-year-old bystander was killed accidentally, and four others were wounded by celebratory gunfire.

The 500 released prisoners were the first of 900 whom Ariel Sharon, Israel's Prime Minister, pledged to free after Mahmoud Abbas was elected as Palestinian President. The release forms a central part of Mr Abbas's efforts to secure a halt to violence. Mr Abbas has made it clear that he regards the further release of prisoners as the highest priority among the confidence-building measures he needs from Israel to sustain peace.

Palestinian officials said that the average sentence of the prisoners was three to 10 years, and that about 380 had between one and two years of their sentences left to serve, with the rest having shorter periods of their terms remaining.

The Israeli authorities said that no prisoners who were convicted of killing Israelis were freed, but Mr Sharon has indicated that he might consider releasing some "with blood on their hands" after a successful disengagement from Gaza.

There were chaotic scenes briefly, after two buses carrying prisoners under Israeli military escort from the Tarqumia checkpoint outside Hebron ­ their hands outstretched through the open windows ­ failed to stop at the end of a side road where several hundred relatives were being forced to keep to the verge by troops.

The families rushed for their cars and drove in an impromptu motorcade ­ some waving Hamas and Islamic Jihad flags ­ for about three miles to the city to find the released prisoners.

Military police said the freed prisoners had signed pledges saying they would not take part in violent activity.

But Aziz Halabi, whose son was released after serving two-thirds of an 18-month sentence for Islamic Jihad membership, said he and another son, who was still serving a 17-year jail sentence, would "continue the struggle" if required to do so.

He said all his sons were members of the faction, adding, "I praise God for that." Umm Salah, the mother of another released prisoner, said her son had only once seen his two-year-old daughter, Asma, since he was jailed. He was imprisoned when he was unable to tell troops how to find his two wanted brothers.

"We couldn't send her picture to the prison so we published it three times in the Al-Quds newspaper," she said. • Egypt has named a new ambassador to Israel, fulfilling a pledge made at a peace summit this month, Israel's Foreign Minister said yesterday. Silvan Shalom called the appointment part of a growing "process of conciliation". Mr Shalom said Israel had been asked to approve the credentials of Mohamed Assem, who has served as ambassador to the US. Egypt declined to comment.