An official claimed that Hersh Goldberg-Polin, Eden Yerushalmi and Carmel Gat would have been released as part of the July 2 proposal.
Defense Minister Yoav Gallant had previously warned that Israel's insistence on remaining in the Philadelphi Corridor could endanger hostages' lives.
Hamas official Izzat al-Rishq claimed the hostages had been killed in an Israeli airstrike using American weapons.
If Israel's return to Philadelphi would have been possible with a hostage deal, many argue that Netanyahu's refusal to withdraw contributed to the deaths of the hostages.
'Hamas obstacle to hostage deal,' sources charge amid reports negotiations may collapse • IDF kills PIJ commander
Opposition MKs demand Netanyahu appear before the Foreign Affairs and Defense Committee, citing his failure to achieve war objectives and decisions risking Israel's security.
A doctor who went to treat Natali Zangauker's wounds was arrested.
While Israel has been willing to go a long way to return the remaining hostages, negotiators say that the real obstacle is Hamas' demands, as protests in Israel continue to demand a deal.
“I can’t allow myself to feel that this would be the last time. I need to keep hope that Keith will come home, if not tomorrow then the day after with all the other hostages.”
A wider Middle East war at this time, a war that may necessitate the use of American force that is concentrated in the region, is not the way the Democrats want to go to the ballot box in November.