Taliban-linked militants holding three U.N. hostages claimed Wednesday the Afghan government has agreed to free some of their jailed comrades to prevent the killing of the foreign captives.

Afghan state television reported that President Hamid Karzai (search) had decreed the release of prisoners for Eid (search), the end of the Muslim fasting month, expected on Sunday. But there was no indication the release would cover any inmates identified by the hostage-takers.

Jaish-al Muslimeen (search), or Army of Muslims, is demanding the release of 26 prisoners, 11 of them allegedly held at the U.S. military base at Guantanamo Bay (search), Cuba, if it is to spare the lives of the three foreigners: Shqipe Hebibi of Kosovo, British-Irish Annetta Flanigan, and Philippine diplomat Angelito Nayan.

"We have been given signals that the prisoners whose release we demand will be freed," the group's leader Akbar Agha told The Associated Press in a telephone call.

Beghjet Pacolli, a businessmen from Kosovo who has traveled to Kabul to seek Hebibi's release, told the AP he also had assurances that a deal was in the offing and the three could be freed within a day.

Agha said his group was insisting a prisoner exchange be finalized Wednesday evening and take place shortly after.

"We will not leave it until tomorrow," Agha said. "We want our colleagues holding the hostages to be free and go home for Eid."

The militants say 15 of the prisoners they want released were seized by American troops near the southern border town of Spin Boldak last month and are still in the country. They claim the others were detained earlier and have been transferred to Guantanamo.

U.S. military officials in Afghanistan have declined to say whether they will release any suspects.

But visiting U.S. Deputy Secretary of State Richard Armitage said there was little room for maneuver and warned such negotiations could encourage more copying of the kidnap tactics used in Iraq.

"I pray for the safety of those who are held hostage," Armitage told reporters in Kabul. "But having said that, it is the United States' view that negotiating with hostage-takers, compromising with hostage-takers only encourages more."

Pacolli predicted the hostages would be released by Thursday night.

"Unless something very bad happens, the process of freeing the hostages will start today," he said.

The television report said aged and chronically ill prisoners, those with less than a year left to serve, and women in the second half of their jail term would be freed for Eid. Officials could not be reached for comment on the report late Wednesday.

A year ago, prisoner releases to coincide with the festival was followed by the freeing of a kidnapped Turkish engineer. The government denied any connection.

Afghan officials have reported progress but no agreement with the group which claims it abducted the U.N. staff from the capital Kabul 13 days ago. The three had volunteered to organize Afghanistan's landmark election in October.

Pacolli, who runs a business in Switzerland, said he was in contact with the hostage-takers through intermediaries he declined to identify. He insisted he offered no ransom.

Officials say Jaish-al Muslimeen emerged earlier this year as a breakaway from the former ruling Taliban, who have waged a stubborn insurgency since their ouster in 2001.

The new group is believed to have carried out a number of operations in the south, such as attacking fuel trucks supplying U.S. troops. But officials suspect it had the help of warlord militias or criminal groups with the bold daylight kidnapping.