An American law student who had been held as a Mossad spy in Egypt since June is on his way to freedom.

Ilan Grapel has been released by the Egyptian authorities in return for 25 prisoners who were being held in Israeli jails. He is being flown to Israel in the company of two Israeli Knesset members, who reported that he appeared fine and was smiling.

Mr Grapel, 27, has joint Israeli and American citizenship and grew up in New York but also served in the IDF, including during the second Lebanon war.

He was arrested in Cairo and has been held since without charge. His family denied that he was a spy and said that he was working for an NGO when he was detained

His release comes just over a week after a prisoner swap saw Gilad Shalit return home after more than five years in the captivity of Hamas.

While in the Shalit deal many of those released from prison early were serving life sentences, the majority of the Egyptian prisoners were serving short sentences for smuggling.

Mr Grapel will be reunited with his mother at Ben Gurion airport before meeting Prime Minister Benjamin Netanyahu.