Prime Minister Ehud Olmert said the measure aimed at boosting Abbas' standing in the wake of rival Hamas' forcible seizure of the Gaza Strip would not hurt efforts to return abducted Israel Defense forces soliders.
"Without a doubt, this move won't hurt the chances to bring about the release of Gilad Shalit, Eldad Regev and Ehud Goldwasser, and it might even create conditions that will ease the process," Olmert said.
Six ministers voted against the move: Itzhak Aharonovich of Israel Beiteinu, Kadima's Shaul Mofaz and all four ministers of ultra-Orthodox Shas.
According to Olmert, the approval comes after thorough deliberations and consultations with ministers and security officials.
"I think that this gesture is a fitting one, and not a product of some illusion," said Olmert.
Explaining the motives behind the move, the prime minister said, "We want to make use of all means to strengthen moderate forces within the Palestinian Authority, and to encourage them to follow the path that we believe can create conditions for real talks."
The list of prisoners slated for release is not yet final. It will follow criteria set by Ariel Sharon's government four years ago, starting with the ban on releasing any prisoners "with blood on their hands," meaning any who have murdered Israelis.
The prisoner release would be the first since February 2005, when Israel freed 500 in a similar move aimed at bolstering Abbas, who had just been elected PA chairman.
Shas Chairman Eli Yishai responded to the vote by saying, "If terrorists are being released, there is no reason not to also free Jews who have killed Arabs." Shas has lent its support recently to a Jewish group actively pursuing this call.
Mofaz maintained that the release would not strengthen Abbas, while MK Gideon Sa'ar (Likud) said the government decision was irresponsible and would harm the security of Israeli citizens.
Israel will consider releasing on humanitarian medical grounds several longtime prisoners from Fatah who were convicted of serious crimes and served in jail for many years. Similar gestures were made under Sharon.
Olmert on Saturday sent back the list of the Palestinian prisoners slated for release to the Shin Bet and Justice Ministry, demanding the removal of several dozen names. He ordered that a new list be drawn up of prisoners with more time to serve of their jail sentences.
Saeb Erekat, a top aide to Abbas, urged Israel to coordinate the release with the Palestinians. "We have not been consulted on this release, he said," adding that Israel has rejected calls to convene a joint committee on prisoners.
The Palestinians have urged Israel to release some of the most prominent prisoners, including Marwan Barghouti, a top official in Abbas' Fatah movement who is serving life sentences for involvement in five murders. Israel has rejected calls for Barghouti's release.
Riad Maliki, the information minister in Abbas' new government, said he expected the 250 prisoners to be former military men from pro-Fatah security forces. "If it was in our hands to choose...we would have chosen a group that more fairly represented the body of Palestinian prisoners, from all political groups," Maliki said.
In Gaza, where Hamas seized control last month, after which Abbas dismissed the militant group from the PA government, Hamas spokesman Sami Abu Zuhri said a release of Fatah prisoners signaled that Abbas is collaborating with Israel. "He should have refused any release unless it includes all Palestinian prisoners," he said.
A political source in Jerusalem said that the criteria for release will favor prisoners who have served two-thirds of their sentence, but that if not enough prisoners were found who met the rules, Israel would be flexible and release prisoners who had completed less than two-thirds of their sentence.
Spokeswoman for Olmert, Miri Eisin, said Israel would allow 48 hours for the releases to be challenged in petitions to the high court.
A team headed by Justice Ministry Director General Moshe Shilo will put together the list of prisoners with input from the Shin Bet, the police, Prisons Service and the army.
In a related development, The Palestinian daily Al-Ayyam reported Saturday that Ofer Dekel, Olmert's point man in the matter of Israel's kidnapped and missing soldiers, met with Samir Kuntar 10 days ago at Hadarim Prison.
Kuntar was jailed by Israel in 1979, following his conviction for murdering the Haran family in a terrorist attack in Nahariya. Hezbollah is demanding Kuntar's release in return for the release of the kidnapped Israeli reservists Udi Goldwasser and Eldad Regev.
Dekel reportedly told Kuntar that there had been progress in the German-brokered negotiations with Hezbollah, which Dekel said had been held up by Hezbollah's demand that Israel release Palestinian prisoners.