AL QUDS, Dec 5: A major thorn in the side of Israeli-Egyptian relations was removed on Sunday after Cairo freed an Israeli Druze jailed seven years ago for spying as the Jewish state released six Egyptian students.

Azzam, who was jailed back in September 1997 for 15 years, was handed over at the Taba border crossing between the two countries, triggering scenes of joy in his home village in northern Israel.

Israeli Prime Minister Ariel Sharon promptly rang Azzam to welcome him home. "This is a happy moment in the history of the state of Israel, a moment that we have waited for a long time," said Sharon.

Azzam in turn told Sharon that he felt "fortunate and proud to have been born in Israel", according to a statement from the prime minister's office. The statement from Sharon also raised the possibility of the release of some of the estimated 7,000 Palestinians being held in Israeli prisons.

Sharon had "ordered the relevant security authorities to consider the possibility of shortening the prison terms of Palestinian prisoners in accordance with previously determined criteria."

Israeli officials confirmed the six Egyptian students - Mustafa Abu Deif Ali, Mohammed Yusri Hussein Salem, Mahmud Gamal Ezzat Ali, Mustafa Mahmud Yussef Mohammed, Mohamed Maher Sayed Ahmed and Emad Sayed Ahmed Tuhami - had been freed.

All six were arrested in August on suspicion of trying to kidnap and assassinate Israeli soldiers. The director general of Israel's foreign ministry, Ron Prosor, told public radio that a warming in ties could lead Egypt to send an ambassador to Tel Aviv "in the near future".

Diplomatic relations were downgraded after the September 2000 outbreak of the Palestinian intifada as part of Egyptian protests about the Israeli tactics in trying to counter the uprising. "Both are linked by peaceful relations and it is normal that Egypt should have an ambassador in Israel," said spokesman Maged Abdel Fattah. -AFP