By Allyn Fisher-Ilan

JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu's cabinet will consider releasing more than 100 Arab prisoners held by Israel in order to boost prospects for talks expected with the Palestinians in Washington next week, Israeli officials said on Saturday.

Israel's agreement to free the inmates, held since before a 1993 interim accord with the Palestinians, is seen as critical to U.S. hopes of convening Israeli and Palestinian negotiators to resume peace talks that have been stalled since 2010.

Netanyahu has already agreed to free the prisoners, but wanted cabinet approval to help overcome qualms among Israelis about freeing inmates convicted of involvement in lethal attacks, Israeli officials said, speaking on condition of anonymity.

His plan calls for releasing them over at least four stages stretched over a nine-month period, the officials said.

Silvan Shalom, a senior cabinet minister, said on Friday the prospective release of prisoners with "blood on their hands" was "a difficult step, but you have to see the whole picture, which is a resumption of negotiations."

Palestinian President Mahmoud Abbas has demanded that Israel free the prisoners, all held for more than 20 years, as a condition for resuming negotiations.

Peace talks ran aground three years ago in a dispute over Jewish settlement building, which Palestinians say deprives them of land they need for a state.

The Israeli cabinet is also expected to name Netanyahu as head of a four-member senior cabinet team charged with reviewing the 100 or so prisoners slated for release, among thousands of Arabs incarcerated by Israel, the Israeli officials said.

SHUTTLE DIPLOMACY

After months of intense shuttle diplomacy by U.S. Secretary of State John Kerry, Israeli and Palestinian officials have said their negotiators may meet next week in Washington, possibly as early as Tuesday.

But though two weeks have passed since Kerry announced he had laid the groundwork for a breakthrough, no formal date for renewing negotiations has been announced. The two sides still differ over core elements of a deal to establish a Palestinian state alongside Israel on land Israel captured in the 1967 Middle East war.

Abbas had pressed for explicit guarantees that Israel would negotiate a withdrawal based on borders from before the 1967 war. Israel has resisted, insisting it would keep several settlement blocs and East Jerusalem, a city it annexed as part of its capital in a move never recognized internationally.

Netanyahu, who seeks peace talks without preconditions, needs to win over pro-settler hardliners in his cabinet, who oppose yielding any West Bank land. He hopes to persuade them to take steps for peace by promising legislation that would require him to hold a public vote before he could sign any peace deal.

He also hopes to present talks with Palestinians as a "strategic process to tighten relations with the United States", officials said. They said this was important in light of the threats posed by what both countries suspect is Iran's development of nuclear weapons - although Tehran denies that - and by spreading civil strife in Syria and Egypt.

Should he run into significant cabinet opposition, Netanyahu can also count on the support of the left-of-centre Labor party, which has said it would support any peacemaking moves in parliament.

(Editing by Mark Trevelyan)