* Israeli, Palestinian, Egyptian negotiators seek deal in Cairo
* Truce in Gaza set to expire at 2100 GMT on Wednesday
* Hamas wants lifting of Israeli, Egyptian blockade of Gaza (Adds proposed conditions for deal, Palestinian comments)
By Nidal al-Mughrabi and Lin Noueihed
GAZA/CAIRO, Aug 13 (Reuters) - The threat of renewed war in Gaza loomed on Wednesday as the clock ticked toward the end of a three-day ceasefire with no sign of a breakthrough in indirect talks in Cairo between Israel and the Palestinians.
A Palestinian official with knowledge of the negotiations said Egypt had presented a new proposal for a permanent truce agreement that addressed a major Palestinian demand for a lifting of the Israeli and Egyptian blockades of the Gaza Strip.
Israel and Egypt harbour deep security concerns about Hamas, the dominant Islamist group in the small, Mediterranean coastal enclave, complicating any deal on easing border restrictions.
It was unclear from the official's remarks how those worries, along with Israel's demand for Gaza's demilitarisation, would be dealt with. Hamas spokesman Sami Abu Zuhri said disarming was not an option.
Israeli negotiators returned to Egypt after overnighting in Israel with the truce in the month-old hostilities - which have killed 1,945 Palestinians in the Gaza Strip and 67 on the Israeli side - due to expire at 2100 GMT.
Palestinian delegates and Egyptian intelligence officials reconvened for talks that could go down to the wire.
Azzam Ahmed, an official of the mainstream Fatah party who heads the Palestinian team in Cairo, said the negotiations were at a very sensitive stage and it hoped to reach a ceasefire agreement before the current truce runs out.
Egyptian and Palestinian sources said Israel had tentatively agreed to allow some supplies into the Gaza Strip and relax curbs on the cross-border movement of people and goods, subject to certain conditions. They did not elaborate, and in Israel, officials remained silent on the state of the talks.
A Palestinian demand for a Gaza seaport and reconstruction of an airport destroyed in previous conflicts with Israel has also been a stumbling block, with the Jewish state citing security reasons for opposing their operation.
But the Palestinian official said Egypt had proposed that a discussion of that issue be delayed for a month after the long-term ceasefire deal takes hold.
As part of the Egyptian blueprint, Israel would expand fishing limits it imposes on Gaza fishermen to six miles (10 km) from the usual three-mile offshore zone.
"It will increase gradually to no less than 12 miles in coordination between the Palestinian Authority and Israel," the official said, referring to a likely expanded role in Gaza affairs for the government of Western-backed President Mahmoud Abbas, based in areas of the West Bank not occupied by Israel.
In addition, the official said, the Egyptian plan calls for reducing the size of a "no-go" area for Palestinians on the Gaza side of the border from 300 metres (yards) to 100 metres so that local farmers can recover plots lost to security crackdowns.
A Palestinian official said the Palestinian delegation had agreed that reconstruction in Gaza should be carried out by a unity government of technocrats set up in June by Hamas and Abbas's more secular Fatah party.
The two sides are not meeting face-to-face in Cairo: Israel regards Hamas, which advocates its destruction, as a terrorist group. But the official said once they inform Egypt of their agreement, a ceasefire accord could be signed the same day.
Since Israel launched its military campaign on July 8 to quell cross-border rocket fire from Gaza into the Jewish state, most of the Palestinian dead have been civilians, hospital officials in the small, densely populated enclave say.
Israel has lost 64 soldiers and three civilians. Many of the Palestinian rocket salvoes have been intercepted by the Iron Dome anti-missile system or fallen on open ground, but have disrupted life for tens of thousands of Israelis.
The heavy losses among civilians and the destruction of thousands of homes in Gaza, where the United Nations said 425,000 of 1.8 million population have been displaced by the war, have stoked international alarm.
On Tuesday, Moussa Abu Marzouk, Hamas's leader in Cairo, described the negotiations as "difficult". An Israeli official, who declined to be identified, said no progress had been made.
Defence Minister Moshe Yaalon, speaking on Tuesday, told Israel's armed forces to prepare for a possible resumption of fighting. A previous 72-hour ceasefire last week expired without a longer-term deal and Palestinian rocket attacks and Israeli air strikes resumed, although at lower intensity.
"It could be that shooting will erupt again and we will again be firing at them," Yaalon said.
Israel pulled ground forces out of Gaza last week after it said the army had completed its main mission of destroying more than 30 tunnels dug by militants for cross-border ambushes. It now wants guarantees Hamas will not use any reconstruction supplies sent into the enclave to rebuild the tunnels.
(Additional reporting by Stephen Kalin and Asma Alsharif in Cairo; Writing by Jeffrey Heller in Jerusalem; Editing by Mark Heinrich)
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