BERLIN, Jan 24: Israel and Lebanon's Hezbollah group have agreed to a two-stage prisoner swap after more than three years of negotiations, Germany's government, which helped broker the deal, announced on Saturday.

"With this agreement Israel and Hezbollah have achieved a breakthrough in seeking to soothe one of the most painful consequences of the Middle East conflict," the German government said in a statement.

The deal is expected to be implemented over the course of the next week.

In a first stage, Hezbollah will repatriate Elhanan Tannenbaum, a former army official abducted in 2000, and three other soldiers, presumed dead, who were captured weeks before in a disputed border area of southern Lebanon.

In return, Israel will release up to 400 Palestinians arrested in the West Bank and Gaza strip as well as a number of Lebanese, Syrian and other nationals, including a German accused of being a militant who planned attacks on Israel.

"We expect the deal to be implemented over the course of the next week," German government intelligence coordinator Ernst Uhrlau told reporters. He said the prisoners would probably first be flown to Germany before being flown home.

A second swap will follow if both sides can clarify the fate of Israeli airman Ron Arad, who was shot down over Lebanon during a 1986 bombing raid, the government said. However, details of that swap will be subject to separate negotiations.

Mr Uhrlau said Iran had played a helpful role in the talks. Asked if Iran had helped put pressure on Hezbollah, he said: "Iran can be very persuasive in its arguments."-Reuters