After the Lebanese political rivals reached an accord in Doha last week, ending an 18-month crisis between pro- and anti-Western leaders and electing President Michel Suleiman, and following last week's announcement that Syria and Israel were re-launching peace negotiations, there is now talk of an important prisoner exchange.

Western diplomats in Beirut confirmed to the Middle East Times Tuesday that U.N.-sponsored German mediation had made substantial progress toward such an exchange that might close the file of Lebanese and Israeli prisoners.

According to one diplomat close to the negotiations, German mediators "have been successful in removing some of the prevailing obstacles, making some progress on the issue of prisoners."

In a rally Monday marking the 8th anniversary of the liberation of south Lebanon from Israeli occupation, Hezbollah Secretary-General Hassan Nasrallah promised tens of thousands of supporters in Beirut's southern suburbs that: "Very soon, Samir Kuntar and his brothers will be among us."

Kuntar, 45, is the longest-serving Arab prisoner in Israel. He was sentenced to 542 years in 1980 for killing an Israeli man and his four-year-old daughter in a 1979 attack in the Israeli coastal town of Nahariya.

Kuntar's younger brother, Bassam, told the Middle East Times that his family, hailing from the Druze community, had been informed of "some positive developments" regarding the release of his brother.

"We are waiting for the legal process by the Israeli government in order to ratify the release of Samir," he said.

Kuntar has been excluded from previous prisoner swaps, the last of which was in October, as Israel has linked his release to information on the fate of Israeli airman Ron Arad, whose whereabouts remain unknown since he was captured after his plane was shot down over Lebanon in 1986.

While Israeli officials have remained silent on the expected swap deal, Israel's military radio reported that Israel was ready to free the only five Lebanese prisoners and the remains of 10 Hezbollah fighters in exchange for two Israeli soldiers abducted in a cross-border operation two years ago.

The abduction of Ehud Goldwasser and Eldad Regev in a July 12, 2006, raid triggered a 34-day war.

Also on Tuesday, the family of Lebanese-born prisoner, Nessim Nisr, said that the man will be released on Sunday and deported to Lebanon, according to AFP news agency.

Nisr, of a Jewish mother and Muslim Lebanese father, has spent the last six years in an Israeli prison on charges of collaborating with Hezbollah. He held Israeli citizenship at the time of his arrest in 2002.

"Nessim called a few days ago and informed us that he will be released on Sunday," his brother Omran Nisr told AFP, adding that he had received a document notifying him of his deportation. Nisr, 40, left Lebanon during the 1982 Israeli invasion and joined his mother's family near Tel Aviv.

A compromise deal seems to be in the works, whereby Hezbollah drops the demand on releasing Palestinian prisoners and Israel abandons seeking information on Arad's fate in exchange for Kuntar's freedom.

Observers noted that Nasrallah made no mention of Palestinian prisoners, as he has previously done, when he declared that Kuntar and the rest of the Lebanese detainees would soon be home.

In the largest prisoner exchange between Israel and Hezbollah in January 2004, the Shiite organization released an Israeli and remains of three soldiers in return for 23 Lebanese prisoners, remains of 59 Lebanese fighters and 400 Palestinian detainees, as well as other Arab nationals.

Israeli reports said that Tel Aviv had told the German mediator it would not release Palestinian prisoners in a deal with a Lebanese organization.

However, Lebanon's Al-Akhbar daily reported Tuesday that while Israel had dropped linking Kuntar to Arad, Hezbollah was not compromising on including Palestinian prisoners in any deal.

Quoting unidentified "inside sources," Al-Akhbar said that Hezbollah "has a way to reach an acceptable deal that allows the release of Palestinian detainees and other Arab nationals."

Palestinian sources told the Middle East Times that Hezbollah was coordinating with the Palestinian Hamas movement, which is currently holding Israeli soldier Gilad Shalit captive in the Gaza Strip, in the negotiations for a swap deal.

According to Palestinian estimates, Israel holds more than 11,000 Palestinian and Arab prisoners, including women and children.

Asked to comment on the swap deal, Israeli Infrastructure Minister Binyamin Ben-Eliezer Tuesday told Israeli public radio, "For two years, we have been doing everything possible to bring them home, and we are ready to pay the price for that."