Israeli Prime Minister Benjamin Netanyahu was seeking cabinet approval on Sunday for a contentious release of 104 veteran Palestinian and Israeli-Arab prisoners, to coincide with the resumption of peace talks.
The start of the meeting was delayed for over an hour, as Israeli media said Netanyahu sought to win over opponents within his own rightwing Likud party.
"There are moments when one must make hard decisions for the good of the country and this is one of those moments," his office quoted him as telling ministers at the start of the meeting.
While the names of the prisoners have yet to be officially published, or even revealed to ministers, they reportedly include militants convicted of killing Israeli women and children or Palestinians suspected of collaborating with Israel.
"This moment is not easy is for me, not easy for the ministers, and especially not easy for the bereaved families," Netanyahu said.
An unofficial list published by Almagor, a group representing Israeli victims of Palestinian attacks, said that candidates for release also included those jailed for acts such as the killing of a creditor, murder during car theft and a man convicted of strangling his wife whom he suspected of adultery.
The planned releases have brought protests from Israeli victims' families, settlers and Netanyahu's hardline coalition partners.
"Releasing terrorists for peace is like trying to put out a fire with gasoline, it is dangerous, immoral and irresponsible," settler leader Dani Dayan said in a statement.
Israeli media reported on Sunday that the far-right Jewish Home party intends to vote against the plan, while the equally hardline Yisrael Beitenu has given its ministers a free vote.
Inside the Likud, deputy defence minister Danny Danon urged the party's ministers to vote "no".
"I say that this is a diplomatic mistake, a moral mistake,' he told public radio.
"The message we are giving the terrorists is that, at the end of the day, we are freeing them as heroes."
Commentators nevertheless expected Netanyahu to win the vote, albeit by a narrow margin.
A Palestinian official told AFP on Saturday that the US-brokered renewal of peace talks, stalled since September 2010, would open in Washington on Tuesday.
That has yet to be officially confirmed but French Foreign Minister Fabius hailed the planned resumption of talks on Tuesday.
"I welcome this potentially major step forward which comes after a three-year hiatus and I wish that these negotiations manage to result in an agreement," Fabius said in a statement on Sunday.
Ahead of the talks resumption, the Israeli cabinet approved an "urgent and important" bill which would require a referendum for a peace treaty in some circumstances.
A cabinet briefing paper said the government would ask parliament to fast-track its passage into law.
If adopted, the bill would oblige a referendum in cases where territory over which Israel claims sovereignty is ceded in a peace agreement or by a cabinet decision.
While a plebiscite would not be a requirement in the case of Israeli withdrawal from the rest of the West Bank, it would apply to changes in any part of mainly-Arab east Jerusalem, which Israel occupied in the 1967 Six-Day War and annexed in a move never recognised by the international community.
The Palestinians claim east Jerusalem for the capital of their state. Israel rules out ceding sovereignty over any part of what it calls its "eternal and indivisible capital."
Qadura Fares, head of the Palestinian Prisoners' Club which tracks the well-being of Palestinians in Israeli jails, said on Sunday that there would be no peace talks unless all 104 prisoners returned to their homes.
"If they don't free all of them, there will be no negotiations," he told public radio.
In past deals, Israel has expelled some freed prisoners from the occupied West Bank or annexed east Jerusalem to the Gaza Strip or abroad but Fares said that would not be acceptable this time.
"Expulsion is punishment," he said. "These people. who are now over 50 years old, all of them sick, need to be released to their homes."