Joe Biden claims that Israel has proposed a three phase plan which includes a "full and complete ceasefire" and the return of all Israeli hostages from Gaza.
The US president has urged leaders on both sides not to "lose this moment" as he argues against "indefinite war".
The first phase of the proposed deal would be a ceasefire lasting six weeks, Biden has said.
Hamas would then release "a number" of hostages - including women, the elderly and the wounded - in exchange for hundreds of Palestinian prisoners.
Humanitarian assistance would "surge", with 600 trucks a day entering the strip as civilians return home
GETTYHumanitarian assistance would "surge", with 600 trucks a day entering the strip as civilians return home.
Phase two would include the withdrawal of Israeli forces "from all populated areas of Gaza" and a "full and complete ceasefire".
In addition, Hamas would be required to return all remaining living hostages.
The ceasefire would then be upgraded to the "cessation of hostilities permanently".
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The final phase would be about a "major reconstruction plan" for Gaza, according to the US president.
He added: "Any final remains of hostages who have been killed would be returned to their families."
After announcing the ceasefire, Biden said this was "truly a decisive moment".
"Israel has made their proposal, and Hamas says it wants a ceasefire - this deal is an opportunity to prove whether they really mean it. Hamas needs to take the deal," he said.
The final phase of Israel's proposal is about a 'major reconstruction plan' for Gaza, according to the US president
Reuters"All this progress would make Israel more secure," Biden added.
He said: "All this would create the conditions for a different future, and a better future, for the Palestinian people," a future of "dignity" and "freedom".
"This path is available, once the deal is struck," Biden said.
