A US-brokered ceasefire in the Middle East is being met with cautious optimism by Australia, amid hopes the agreement could also ease social tensions at home.

Israel's cabinet is set to sign off on the deal on Friday, Australian time, with a Gaza ceasefire expected to come into effect within 24 hours.

Under the deal, Hamas will release the remaining Israeli hostages it has been holding in Gaza since October 7, 2023, and Israel will free nearly 2000 Palestinian prisoners.

Federal minister Mark Butler said the ceasefire was an initial step to a peace plan for the region and that many were waiting to see if it holds.

"These are early first steps on a very long road to peace and recovery," he told Seven's Sunrise program on Friday.

"It is really hard not to be excited that - maybe the wor

See Full Page