The German government last year imposed a complete ban on the activities of Palestinian militant group Hamas, already a designated terrorist organization in the country.
The hostages to be released reportedly include women, female soldiers, children under the age of 19, adults above the age of 50, and those who are suffering from illnesses.
Israel carried out airstrikes in Rafah on Monday and told Palestinians to evacuate parts of the city where more than a million people uprooted by the seven-month war are crowded together.