A group of 124 pro-Palestinian activists from 12 Muslim nations crossed the border in five Jordanian buses. Another 200 activists have been transferred from a holding centre to Israel's airport near Tel Aviv, a prison service spokesman said. The remaining activists will be released throughout the day, the spokesman said.
Yesterday Israel indicated it may prosecute some of the activists.
The decision to free the detainees came as more accounts from those on the ships began to emerge.
One Briton who was on one of the boats heading towards Gaza arrived back in Britain last night.
IT professional Hasan Nowarah, from Glasgow, described the moment Israeli troops stormed the aid flotilla.
He told Sky News the Mavi Marmara ship was surrounded by helicopters and Zodiac assault craft.
"All you could see was screaming and bullets. Out of the blue as I looked around our ship, all I could see were hundreds of Zodiacs: hundreds of Zodiacs full of soldiers, and big ships, lots of ships, and I believe as well submarines in the sea," he said.
The assault left nine dead and dozens wounded, and has led to condemnation of Israel and increasing calls for an independent inquiry.
One of the group deported to Jordan today, Walid al-Tabtabai, a Kuwaiti politician who was on board one of the ships with other activists from Muslim countries, said: "The Israelis roughed up and humiliated all of us: women, men and children.
"They were brutal and arrogant, but our message reached every corner of the world, that the blockade on Gaza is unfair and should be lifted immediately."
Like many passengers on the flotilla he insisted there were no weapons on any of the ships.
An Algerian, Izzeddine Zahrour, said the Israeli authorities "deprived us of food, water and sleep, and we weren't allowed to use the toilet".
"It was an ugly kidnapping, and subsequently bad treatment in Israeli jail," he said. "They handcuffed us, pushed us around and humiliated us."
Mauritanian Mohammed Gholam said Israel "wanted us to sign documents saying that we entered Israel illegally".
An Algerian activist, who giving only a first name of Sabrina, accused Israeli commandos of taking a one-year-old child hostage.
"They point a gun to his head in front of his Turkish parents to force the captain of our ship to stop sailing," she said.
A Jordanian government spokesman said there were 30 Jordanians in the group. Jordan is one of two Arab nations with a signed peace treaty with Israel. The Kuwaiti ambassador, Sheik Faisal al-Sabah, said the group included 16 Kuwaitis. He said the other activists came from Azerbaijan, Indonesia, Malaysia, Pakistan, Algeria, Morocco, Mauritania, Yemen, Oman and Bahrain.
Turkey has led criticism of the raid, accusing Israel of committing a "massacre", and the UN security council demanded an impartial investigation. There were reports in the Israeli media today that Israel had ordered the families of its diplomats in Turkey to leave that country because of Turkish anger at the raid.
Washington blocked an attempt at the UN security council for an international inquiry yesterday, issuing a mild statement regretting the loss of life. Hillary Clinton, the US secretary of state, later called the situation in Gaza "unsustainable".
"Israel's legitimate security needs must be met, just as the Palestinians' legitimate needs for sustained humanitarian assistance and regular access to reconstruction materials must also be assured," she said.
Nick Clegg, the deputy prime minister, said this morning that Israel's blockade of Gaza was "an absolute humanitarian catastrophe" that was "not in Israel's own long-term self-interest".
He told BBC Radio 4's Today programme this morning Israel had "every right" to protect its people from terrorist threat, but said: "What I ask my Israeli friends and Israeli politicians and officials I meet is: what's the strategy; where do you go next; how are you going to secure in the long term – not just day to day – the security which you rightly crave?"
Last night, the foreign secretary, William Hague, said 31 British nationals and a further 11 with dual nationality were known to have been detained after the seizure of the vessels as they attempted to breach the Israeli blockade of the territory.
The Foreign Office confirmed that 29 of the Britons had received a visit – with no complaints about their treatment.
Mark Regev, a spokesman for the Israeli prime minister, Binyamin Netanyahu, said the detainees were being treated in line with international practice.
"We are not charging them with anything. We have detained them and we will help them leave our country," he told the BBC.
There was concern among friends and relatives in the UK, who complained that they were unable to establish contact with the detainees.
Rachel Bridgeland, whose partner, Peter Venner, 63, from Ryde on the Isle of Wight, was on the Mavi Marmara, said the government should be putting more pressure on Israel.
"It is absolutely terrible not knowing what has happened to him, and it's terrible that the British government hasn't done more, but they don't want to fall out with Israel," she said.
Skimmed back and didn't see this posted.