Israel tonight started a "gradual withdrawal" of its troops from the Gaza Strip after both the Jewish State and Hamas declared unilateral ceasefires.

In tentative moves by both sides to end 22 days of fighting, Israel announced a halt to its military operations early this morning and the Islamists' leadership in Syria replicated this afternoon.

The mutual halt to the fighting, which diplomats tonight said was "fragile", came amid a game of diplomatic brinkmanship being played out by both sides.

Analysts said Israel initiated its ceasefire to show the international community the problems it faced if - as Israeli officials expected - Hamas kept firing barrages of rockets at the towns of Sderot and Ashkelon in southern Israel. The strategy initially appeared to be working as Hamas fired at least five rockets at Sderot this morning and said that it would not stop fighting until all Israeli troops had left Gaza.

However, Hamas this afternoon placed the ball back in Israel's court by announcing a conditional ceasefire of its own - demanding Israel pulling its troops out of Gaza within a week and reopen the territory's blockaded crossings.

"We... announce a ceasefire of our factions in the Gaza Strip and we stress that our demand is the withdrawal of the enemy forces from the Gaza Strip within a week, along with the opening of all the crossings for the entry of humanitarian aid, food and other necessities for our people in the Gaza Strip," Moussa Abu Marzouk, Hamas's deputy leader, said on Syrian TV.

Israel tonight responded by confirming it was embarking on a pullback of its troops from the territory, but did not say when it would be completed or how many were being withdrawn. “I can confirm that there is a gradual withdrawal from the Gaza Strip,” an army spokeswoman said.

A spokesman for Ehud Olmert, the Prime Minister, added that he did not know whether the ceasefire would last. "We’ll play this day by day. We’ll see how this goes. We want to leave Gaza. We’ll do so as soon as we can,” he said. Troops and tanks were seen streaming back over the border for much of the day.

Gazans, meanwhile, emerged from their homes to survey the wreckage caused by the conflict. As Hamas congratulated the Palestinians on "victory" from mosque loudspeakers, most residents inspecting the damage were left horrified by the destruction caused by the conflict and were in no mood to celebrate.

“Everything has been completely destroyed,” said Yahia Karin, 54, as he surveyed the damage in Zeitun, his neighbourhood in southern Gaza that was the scene of some of the most furious battles between ground troops and militants.

The ceasefire comes after more than three weeks of fighting in which Israel blitzed Gaza following the breakdown of a previous halt in fighting. Some 1,200 Palestinians, about half of them civilians, have been killed in the densely populated territory, according to Palestinian and UN officials, as Israel targets rocket-launchers often placed in areas densely populated by civilians. Thirteen Israelis, 10 of them soldiers, have also died.

As the shaky halt in hostilities took hold, politicians meeting in the Egyptian resort of Sharm el-Sheikh said the pause should be converted into a permanent ceasefire. “Three weeks of tragedy must be followed by immediate action to secure a permanent peace settlement,” Gordon Brown told a joint press conference chaired by Hosni Mubarak, the Egyptian President, and French President Nicolas Sarkozy.

“I believe that I can see a clear path to peace and I believe that the most courageous leaders in this region can also see a path to peace.

“I believe that with President Obama coming into power on Tuesday, it is our duty ... to build on what has been built by President Mubarak and to move quickly towards a permanent peace settlement that will recognise a secure Israel and a viable Palestine.”

Mr Brown used the summit to announce an additional £20 million of British humanitarian aid for Gaza.

Israel's ceasefire announcement received mixed reviews in the country's press. Mr Olmert argued that Israel had more than achieved the goals of Operation Cast Lead. Hamas had been “badly beaten” and its ability to attack Israel severely damaged, he said.

However, members of Benjamin Netanyahu’s right-wing Likud party, which looks set to win Israel’s general election on February 10, said Israel had received no clear guarantees that smuggling into Gaza and stockpiling of weapons would stopped.

There was also criticism of the Israeli Government’s failure to secure the release of Gilad Shalit, the soldier kidnapped in 2006 while, more broadly, Israel’s overwhelming use of force against one of the world’s most densely populated territories has badly damaged its international standing.

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