The court's decision came on the eve of the second round of US-brokered peace talks between the Jewish nation and the Palestinian Authority.
The court's nod, following a heated but affirmative vote by the government last week, set the stage for pardoning the long-term prisoners and releasing them tonight, Israel Prisons Services officials said.
The Supreme Court deliberated on the petition on Sunday, a few hours before the ministerial committee finalised the list of 26 prisoners to be released as part of Israel's goodwill gestures to the Palestinians ahead of the resumption of talks.
"The government is authorised to appoint a ministerial committee which will look into various issues regarding prisoners' release," Grunis said.
Several times in the past, the court has granted government "the authority to determine that all decisions regarding prisoners' release will be made in a small ministerial committee", he said.
The judges dismissed petitioners' claim that the release of "terrorists" is unreasonable and incompatible with policies determined by previous Israeli governments.
Almagor Terror Victim's Association, which filed the petition challenging the release of the prisoners, responded to the Court's decision by saying, "The bereaved families see this as proof that the Prime Minister's immoral politics have penetrated the halls of the court.
"The Supreme Court today closed the door before bereaved families and Jewish victims of terror, something it has not done to Palestinians," said Almagor.
It termed the suspension of building of the security barrier and acquiescence to requests for stopping certain interrogation and arrest procedures as examples of the court's bending to the will of Palestinians.
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