Israeli Prime Minister Benjamin Netanyahu's shift in position may threaten efforts to reach a deal on a ceasefire in the devastated Gaza Strip.

Israel's Prime Minister Benjamin Netanyahu has reportedly backpedalled on a major concession in discussions aimed at reaching a ceasefire in Gaza.

US broadcaster CNN reported that an Israeli source said Netanyahu had insisted 'armed men' be prevented from going back to the strip's north when a ceasefire is implemented.

Israel had earlier said Palestinians would be allowed full freedom to access north Gaza, however, Netanyahu instructed negotiators this week to make his new demand, according to CNN's source.

The shift in position may threaten efforts to reach a deal, which would also include the exchange of Israelis held in Gaza and Palestinians held in Israel.

Israeli news website Walla reported Netanyahu had made a similar demand, citing a senior Israeli official participating in negotiations.

But Netanyahu's office said: "The claim made by an unnamed source regarding adding principles is unfounded and baseless."

Netanyahu "has stood and continues to stand" by his "firm position" in accordance with the broad outline for the return of the captives, his office said.

"Hamas is the one attempting to change the broad lines, and the prime minister opposes their influence," it claimed.

Israeli newspaper Yedioth Ahronoth reported that there were "concerns in Israel" that the prime minister was attempting to "obstruct the conclusion" of an agreement.

It follows "disagreements" between him and the chiefs of Israel's Mossad and Shin Bet intelligence agencies, David Barnea and Ronen Bar, over some of the provisions of the suggested agreement.

Israel's war on Gaza has killed at least 38,443 people, according to the Palestinian enclave's health ministry. The war on the Strip has levelled entire neighbourhoods and plunged Gaza into a deep economic crisis.

Ambulances, hospitals, and residential buildings have been attacked and South Africa has accused Israel of genocide at the International Court of Justice.

A Hamas-led attack on 7 October on southern Israel resulted in the deaths of 1,195 people, according to an AFP tally based on Israeli figures.

There were 251 captives taken, 116 of whom remain in Gaza, including 42 the military says are dead.