* Video-for-prisoners swap first part of bigger exchange

* Egyptian, German mediators arrange exchange

By Allyn Fisher-Ilan

JERUSALEM, Oct 2 (Reuters) - Israelis waited on Friday to see the first pictures of a soldier held in the Hamas-dominated Gaza Strip since his 2006 capture, as part of a deal in which Israel was to free 20 Palestinian women from its jails.

The expected handover of a videotape showing Gilad Shalit, which would be the first evidence he was still alive, was a step towards a possible broader deal to swap him for hundreds of Hamas prisoners and ease an Israeli blockade of coastal Gaza.

Under the deal, made possible by Egyptian and German mediators, 19 Palestinians would be released to Gaza and the occupied West Bank on Friday, and a 20th on Sunday.

A source for Gaza militants said the videotape would be handed to Israel "once the prisoners are released to checkpoints near their homes", as agreed with the German mediator.

Officials have said that the mediator has already viewed the recording and believes it showed Shalit in recent weeks. Shalit's family was expected to view the videotape before its release to the public on Friday.

Abu Mujahed, a spokesman for the Popular Resistance Committees, said on Wednesday that the video of the soldier lasts about a minute, and "shows Shalit alive and moving".

Israeli Prime Minister Benjamin Netanyahu said in a statement on Wednesday it was "important for the entire world to know that Gilad Shalit is alive and well and that Hamas is responsible for his well-being and his fate".

Shalit, now 23, and also a French citizen, was spirited into Gaza by Islamist militants who tunnelled into Israel in a raid in which two soldiers and two of the attackers were killed.

Israel holds more than 10,000 Palestinian prisoners. Hamas is negotiating for the release of hundreds of its members in exchange for Shalit, including militants behind deadly attacks who Israel has said in the past it would not free.

Israeli has said none of the Palestinian women being freed on Friday were directly involved in killings or serving a sentence exceeding two years. (Additional reporting by Nidal al-Mughrabi in Gaza; writing by Allyn Fisher-Ilan; editing by Tim Pearce) (For blogs and links on Israeli politics and other Israeli and Palestinian news, go to http://blogs.reuters.com/axismundi)

AlertNet news is provided by