Hamas released a third group of hostages including a four-year-old American girl Sunday, in exchange for Palestinian prisoners on day three of a truce which a source close to the Hamas said they were willing to prolong.

The transfers under a four-day truce that started Friday have been the first relief for captives' families since the Hamas group attacked Israel on October 7, prompting devastating Israeli bombardments of the Gaza Strip.

Israeli officials said 17 hostages were back on Israeli territory after the latest release. One, in her 80s, was admitted to hospital which said her life was in danger.

US President Joe Biden announced that among those freed is a four-year-old American girl.

"She's been through a terrible trauma," Biden said of Abigail, whose parents were murdered by Hamas during the unprecedented attacks.

The 17 hostages, including three Thai nationals, were released outside the terms of the truce.

Hamas said a Russian-Israeli, Ron Krivoy, was freed "in response to the efforts of Russian President Vladimir Putin" and his "support of the Palestinian cause

Those released were among around 240 people captured on October 7 when Hamas fighters broke through Gaza's militarised border with Israel in the country's deadliest attack.

The Hamas operatives killed about 1,200 Israelis and foreigners, according to Israeli authorities.

Sunday's releases bring the total number of Israelis freed under the deal to 39 since Friday.