BEIRUT: Israel and Hizbullah have reached a deal brokered by Germany for a prisoner exchange to take place within two or three weeks, state-owned Egyptian daily Al-Ahram reported Sunday. "The prisoner swap deal between Hizbullah and Israel will take place within two or three weeks at the utmost, thanks to German mediation which is currently arranging the general framework for the deal between the two parties," the paper said quoting high ranking officials.

However, Hizbullah did not confirm the report.

"We don't have any details besides what we hear from the Israeli side, which is that a retired German general is preparing a team to broker a deal," Hizbullah MP Mohammad Raad said.

He added that Hizbullah "does not have any additional information on the deal. We are watching things closely."

Al-Ahram said the swap might happen simultaneously or in two stages.

In the second scenario, Hizbullah will hand over the two soldiers it captured on July 12 and would receive "100 percent guarantees from the German mediator" that Israel would release Lebanese prisoners on the second or third day.

Hizbullah dubbed the raid Operation True Promise, saying it was making good on an earlier pledge to continue to capture Israeli soldiers and use them to obtain the release of the remaining Lebanese in Israeli jails.

The most recent swap - also brokered by Germany - took place in January 2004 when Israel handed over more than 400 Lebanese and Palestinian detainees in return for one Israeli reservist colonel and the bodies of three soldiers abducted along the Lebanon border in 2000.

That exchange left just three Lebanese prisoners in Israeli jails: Samir Qantar, Nassim Nisr and a third, Yehya Skaff - whom Israel denies is being held. Qantar has been in prison for 28 years.

Hizbullah politburo member Ahmad Malli said the prisoner exchange deal will be similar to that of 2004.

"A prisoner swap will take place regardless of Israel's demand to release the soldiers without negotiations," he said.

"We did not emerge from this war the weak party to submit to Israel's demands and nothing will stop us from swapping these two soldiers with our prisoners in the Israeli jails," he added.

Israeli Foreign Minister Tzipi Livni has said her government is ready to negotiate for a release of the two soldiers.

Al-Ahram said an exchange between Israel and Hizbullah would help secure the release of a third Israeli soldier, Gilad Shalit, captured June 25 in Gaza.

"Once a Hizbullah-Israel deal is reached, the Shalit problem could be solved" even before the other two soldiers are freed, the newspaper said.

Shalit's captors have demanded the release of hundreds of Palestinians detained by Israel, including women and minors.

The Jewish state has officially refused a swap and launched a punishing offensive against the Gaza Strip but mediation efforts led by Egypt are still believed to be under way.