The move is a goodwill gesture for reaching a deal which would end Israel's Operation Protective Edge in Gaza which was launched July 8, as Israeli and Palestinian negotiators are still conducting indirect talks in Cairo, Xinhua quoted an Israeli official telling Ha'aretz daily.
The Israeli Navy has been restricting fishing by Gaza fishermen in the Mediterranean Sea, citing possible security alarms about attempts to deliver weapons by sea.
While Israel was launching its military operation in Gaza in July, the Palestinians said that its military enforced a 500-metre restriction on fishing, comparing with a previous distance of three nautical miles off shore.
As the temporary 120-hour truce between Israel and Hamas is set to expire Monday, it is still uncertain whether the truce would be extended, as was the case in the past two weeks, or the fighting would resume after the deadline.
Earlier Sunday, Israeli Prime Minister Benjamin Netanyahu said there would be no permanent ceasefire deal if Israel's security demands "are not met".
For a final ceasefire, Israel demands to demilitarise the Gaza Strip and disarm Hamas, which Hamas vehemently opposes.
Hamas insists on establishing a seaport and airport in the Gaza Strip, easing Israel's blockade there by opening the Gaza crossings, and releasing 56 Hamas members who were arrested by Israeli forces in the West Bank in June after three Israeli teens were abducted and killed.
Israeli and Palestinian negotiators have been conducting on-off negotiations in Cairo for the past two weeks.