Israel and Egypt reached a prisoner exchange deal that would secure the release of suspected Israeli spy Ilan Grapel in exchange for 25 Egyptians, the Prime Minister's Office (PMO) said on Monday.

"In the framework of efforts by Israel and Egypt, with the aid of the United States, Egypt has agreed to release Ilan Grapel," a PMO statement said Monday evening.

An Israeli Foreign Ministry official told Xinhua Monday evening that the PMO was in charge of crafting and carrying out the deal.

Egyptian security forces arrested Grapel, 27, a student at Emory University in Atlanta, GA, on June 11, and charged him with "spying on Egypt with the aim of harming its economic and political interests," while visiting Egypt at the beginning of the year.

However, both Israel and the U.S. strongly denied the charges, which were later lessened to "incitement, insurrection, and damaging a public building," during the course of riots that swept Egypt at the beginning of the year, which led to the downfall of deposed president Hosni Mubarak.

Israeli Foreign Ministry officials strongly denied the accusations. "He is not a spy, that is completely false," ministry spokesman Yigal Palmor told Xinhua after the arrest was announced.

Grapel's parents and US Embassy officials were able to visit him during his incarceration in Cairo, and said he had been treated well.

Grapel, a U.S. born citizen who emigrated to Israel in 2005, served in the Israel Defense Forces. Grapel was also interested in Arabic affairs, having traveled extensively around the Middle East.

Grapel's release was part of the deal Israel concluded with Hamas for the freeing last Tuesday of a captive Israeli soldier held in Gaza for over five years, in return for Israel releasing 1, 027 Palestinian security prisoners.

An Egyptian spokesman said last week that his country would choose the number and names of Egyptian prisoners they wanted released, and forward them to Israel.

"At Egypt's request, Israel agreed to free 25 Egyptians, including three minors," the Israeli statement read, stressing that none of those due to be released were classified as "security prisoners," and that the deal had to be approved by the security cabinet, which is scheduled to meet on Tuesday to decide on the issue.

Egyptian daily Al Youm al Sabea quoted Egyptian Ambassador to Israel Yasser Reda over the weekend as saying that Israel had provided a list of 81 prisoners it would agree to release in return for Grapel's freedom.