Negotiations between Israel and Hamas on a possible agreement to free hostages have been paused after the killing of Hamas' deputy leader Saleh Arouri in Beirut on Tuesday, reports said.

Talks are now focused on avoiding escalation between Israel and Lebanon, Israeli newspaper Haaretz reported on Tuesday evening, citing Arab diplomatic sources.

The "assassination" of Hamas deputy leader Arouri "has changed the situation," the sources were quoted say saying, adding that it was currently no longer possible to negotiate another deal.

According to Hezbollah sources, Arouri, the Deputy Head of Hamas' Political Bureau who lives in Beirut, died in an Israeli drone attack in a suburb of the Lebanese capital on Tuesday evening. Hamas has also confirmed his death.

Israeli army declines to comment on Hamas deputy chief’s assassination in Lebanon

The Israeli army on Tuesday declined to comment on the assassination of Arouri in the Lebanese capital Beirut.

"The army is in a very high state of readiness on all fronts, defensively and offensively. We are fully prepared for any scenario," military spokesman Daniel Hagari told a news conference.

''The most important thing we must comment on tonight is that we are focusing on fighting Hamas,'' he added.