Shimmering in the late afternoon sun, a lone jeep belonging to the Israeli Border Patrol appeared at the top of a rise in the highway as it slowly approached this city in the Israeli-occupied West Bank.

As the jeep passed the roadblock that had been set up hours earlier by Israeli soldiers, hundreds of Palestinian men and youths who lined the highway erupted in cheers. Close behind the jeep came two long taxicabs, each carrying about six men who smiled, waved and held their fingers in the sign of V for victory.

It was just after 5 p.m., and the first of 605 prisoners released from jails in Israel and the Israeli-occupied West Bank and Gaza Strip had reached freedom in the complex prisoner exchange that took place here, on the Golan Heights and in Geneva today.

In all, Israel released 1,150 prisoners in exchange for three of its soldiers captured in Lebanon in 1982. Some crossed the border into Syria at Kuneitra. Others were flown to Geneva and transferred to aircraft that took them to Libya. The three freed Israelis boarded an Israeli aircraft in Geneva for the flight home.

They arrived at dawn Tuesday at an unidentified military airfield in Israel and were greeted by their families, military officers and a rabbi, The Associated Press reported.

The majority of the Palestinian prisoners were gathered at the Jnaid Prison just north of here, and at jails in Ashkelon and the Gaza Strip, where they waited through most of the day before the complicated prisoner exchange was completed in Geneva and the signal was given to return them to their homes in Israel, the West Bank and Gaza Strip.

After the taxicabs came buses carrying more prisoners, each preceded by an Israeli Border Police jeep in carefully spaced intervals. As each bus passed the roadblock, the highway erupted in the same scene of chanting, cheering euphoria.

As Israeli Border Police bellowed through loudspeakers to clear the highway, Palestinian youths leaped toward the buses, hanging on to the open windows to ride a few yards with some of 290 prisoners who were freed here. The prisoners flashed the V for victory sign. Men and boys crowded into automobiles to follow each bus carrying friends or relatives who had been spotted.

The buses moved slowly through the congested streets of Nablus, while thousands of residents watched the scene from balconies, open windows and street corners. Some reunions of families took place immediately, as men embraced each other on the streets. Other prisoners were taken to Hebron, Ramallah and other West Bank towns, to the Gaza Strip, and to Arab villages in Israel.

Israel has exchanged prisoners before, but the release of so many prisoners to their homes in Israeli-occupied territory and Israel itself was believed to be unprecedented. It meant a joyful night in many Arab homes here but was almost certain to provoke bitter criticism from many Jewish Israelis, among them the families of victims of crimes and terrorist acts committed by some of the released prisoners.

Some of the first criticism came tonight from the Council of Jewish Settlers in Judea and Samaria (the biblical names for the West Bank). Otniel Schneller, the secretary of the council, noted that some of those freed today had been convicted of murdering Aharon Gross, a Jewish seminary student, in Hebron in 1983.

"We feel this act is very dangerous because PLO (Palestine Liberation Organization) people will live in Judea and Samaria in the future," Schneller said in a radio interview. "The same pepple in the past killed Jewish people in Judea and Samaria. That means PLO people will know they can kill Jews in Israel and know that in the future they will go out to freedom."

The political controversy that is certain to surround the prisoner exchange was of no concern to the Arabs who began gathering along the highway this morning and waited for hours in the hot sun for the first sign of the freed prisoners.

One of them was Mohammed Salim Khalil, an Arab citizen of Israel who lives in a village near Tiberias. He learned of the impending prisoner exchange two weeks ago while visiting his brother, Fathi Salim Khalil, who was sentenced to a 20-year prison term in 1969 for his part in a hand-grenade attack inside the student cafeteria at Hebrew University in Jerusalem.

"I feel very, very glad," Khalil said of the release of his brother. "I cannot explain what I feel now."