UPDATE 1-Israel Names Prisoners to be Freed in Swap Deal

* List includes prisoners involved in attacks that killed dozens

* Officials expect first phase of swap deal on Tuesday (Adds details)

By Maayan Lubell

JERUSALEM, Oct 16 (Reuters) - Israel took the first steps on Sunday in a prisoner swap with Hamas in which hundreds of Palestinian militants will be exchanged for captive Israeli soldier Gilad Shalit.

The swap is expected to take place on Tuesday and should bring to a close a saga that has obsessed Israelis for five years.

The gate of a prison in northern Israel swung open on Sunday morning and three heavily guarded vehicles drove out carrying 15 Palestinian female inmates -- some making V-for-victory signs -- to another jail to await their release along with 12 other women and 450 male prisoners in the trade.

Israel's Prison Service posted a list of the 477 prisoners due to go free, along with Shalit, in the first stage of the Egyptian and German-brokered deal, opening the way for anyone opposed to their release to file a legal appeal within 48 hours.

"Unless the Supreme Court intervenes, or someone in Gaza goes nuts, it appears the deal will go through in two days," Yaakov Amidror, national security adviser for Israeli Prime Minister Benjamin Netanyahu, told Army Radio.

Those on the release roster included Palestinians jailed for attacks in which dozens of Israelis were killed. At least five prisoners have been in jail since their teens.

Gaza's Hamas Islamist rulers prepared a heroes' welcome for 295 of the prisoners due to be sent to the territory. Workmen hammered together an open-air stage and streets were decorated with Hamas and Palestinian flags.

"I am so happy I do not know what I will do, how will I hold him? It's been 20 years," said the mother of Naseem al-Kurd, a Hamas member who was sentenced in 1992 to eight life sentences for attacks that killed Israelis.

Workers readied an apartment for Kurd in Gaza, painting walls and repairing doors.

Shalit, a tank crewman captured in 2006 by militants who tunnelled into Israel from the fenced-off Gaza Strip and spirited him into the enclave, was expected to be handed over in Egypt's adjacent Sinai desert and flown to Israel.

EMOTIONAL ISSUE

Israel, which withdrew troops and settlers from the Gaza Strip in 2005, tightened its blockade of the territory after Shalit was seized.

The repatriation of captured soldiers, alive or dead, has long been an emotionally charged issue for Israelis, many of whom have served in the military. But they also feel a sting over the release of convicted killers.

Photos of Shalit's father, raising an Israeli flag over the roof of the family home, featured prominently in Israeli newspapers on Sunday.

An opinion poll by Channel 10 TV showed the exchange was backed by two-thirds of Israelis. Shalit, now 25, was last seen, looking pale and thin, in a 2009 video shot by his captors.

One Israeli group opposed to the deal, the Almagor Terror Victims' Association, said the exchange would lead to more violence and abduction attempts. The Supreme Court will hear its appeal on Monday.

"The judges should explain to terror victims how they allow Israelis to be murdered and (for the killers) to be released. They should look them in the eyes and explain," Meir Indor, head of Almagor, told Israeli television.

Gila Edri-Dekel, whose brother Sharon was abducted and killed by Palestinian militants in 1996, said her family has been in a state of angst since hearing that her brother's killers were to be released in the swap.

"To see the number of prisoners released, to see his killers released, it is another punishment for my mother," Edri-Dekel told Army Radio.

For Palestinians, prisoners held by Israel are revered fighters against occupation in a quest for a Palestinian state.

The deal with Hamas, a group classified by the United States and European Union as a terrorist organisation over its refusal to recognise Israel and renounce violence, is not expected to have a direct impact on efforts to revive Middle East peace talks.

Palestinian President Mahmoud Abbas has been pursuing U.N. recognition of Palestinian statehood in the absence of negotiatiions with Israel that collapsed 13 months ago in a dispute over settlement-building in the occupied West Bank.

President Shimon Peres received on Saturday the details of the 477 prisoners to be released in the first stage of the exchange, and he is expected to sign their pardons by Tuesday, his spokeswoman said.

The second phase calls for the release of 550 Palestinian prisoners. In all, there are some 6,000 Palestinians in Israeli jails.

(Writing by Maayan Lubell; Additional reporting by Ari Rabinovitch in Jerusalem and Nidal al-Mughrabi in Gaza; Editing by)