By Huang Heng, David Harris, Ma Xiaoyan

Hundreds of teenagers wearing white T-shirt shouted Tuesday afternoon outside outgoing Israeli Prime Minister Ehud Olmert's office behind barriers, calling for freedom of soldier Gilad Shalit who was kidnapped by Hamas-led militants in 2006.

"Let Shalit back home, back home now." The teenagers shouted while premier Olmert is holding a meeting with his cabinet members, during which two special envoys updated the cabinet on the details of their intensive talks in Cairo over the weekend with Egyptian mediators on a possible Hamas new offer for Shalit freedom.

Four hours later, demonstrators dismissed, the shouting disappeared. Only Olmert's voice from TV hovered in the mind of disappointed Israelis and echoed their dilemma.

The premier gave a special address to the nation on Tuesday evening, in which he elaborated on the failure of the negotiations aiming at securing Shalit's release.

Foreboding delay 

Before Olmert spoke out the bad news, many people have predicted that time was running out for a potential prisoner swap between Palestinian Islamic Hamas movement and Israel.

The deal would see the return to Israel from Gaza of Shalit, a soldier captured by Hamas three years ago. In exchange, Israel would free hundreds of Palestinians, including many found guilty by Israeli courts of murder and other terror-related crimes.

Olmert tries to complete the deal during his last days in office, while the families of the Palestinian prisoners want to see the successful end to the negotiations before Olmert leaves office. They fear his successor, prime minister-designate Benjamin Netanyahu will be less likely to push ahead with the deal.

Until the start of this week it looked as though a deal was imminent. Israel's chief negotiator, Ofer Dekel, made three visits to Cairo for indirect talks with Hamas.

However, on Sunday it became clear there was a spanner in the works. Dekel's return was delayed and a planned cabinet meeting in Jerusalem on Monday was postponed by more than 24 hours.

On Tuesday morning, after read the Israeli newspapers reporting the seeming collapse of the talks, Yoav Balaks-Boneh, Shalit's former company commander in the Israel Defense Forces told Xinhua he was very disappointed.

"It's an awful feeling because we waited and waited, we were so optimistic and now we're back to the beginning," he said, adding he was angry with the government which is only address for recourse.

"I can't turn to Hamas, it's a terrorist organization, I can't trust it," he said. "I can only fight Hamas on the battleground."