Hezbollah handed back to Israel the bodies of two Israeli soldiers Wednesday, two years and four days after snatching them in a July 12, 2006 cross-border raid that sparked one month of deadly and destructive fighting.

Under a deal brokered by a United Nations-appointed German mediator that closes the final chapter of that 33-day war, Israel for its part handed to Lebanon the bodies of Lebanese fighters and militants exhumed from an anonymous cemetery for enemy combatants in the north of the country.

Five Lebanese prisoners, including convicted killer Samir Kuntar, were waiting at an Israeli army base near the border to be transferred into Lebanon as well, pending identification of the two bodies on the Israeli side.

The first of some 10 Red Cross trucks, carrying 19 wooden coffins, entered Lebanon, Avi Benayahu, the Israeli army's chief spokesman, confirmed to reporters on his side of the only border crossing between Israel and Lebanon, known by the Israelis as Rosh Ha'Nikra and by the Lebanese as Naqoura.

In all, Israel is the transfer the five prisoners and the bodies of 199 enemy combatants to Lebanon, in exchange for its two soldiers.

Completion of the exchange however could take hours.

A top Hezbollah official in charge of the swap, Wafik Safa, told reporters on the Lebanese side of the border that the bodies were in 'bad condition' and that the 'DNA tests on the Israeli side will take some time.'

According to a Hezbollah source, the two soldiers, Eldad Regev and Ehud (Udi) Goldwasser, were badly burnt during the July 12 cross- border raid in which they were captured. Brigadier-General Benayahu confirmed the identification process could take hours.

   Hezbollah had kept the soldiers' condition a secret until the very last minute and despite long and widespread speculation that they were dead, confirmation came only when Hezbollah officials loaded two black coffins off their vehicle and handed them to Red Cross officials on the Lebanese side of the border, in front of journalists and television cameras.

   Only after positive identification, will Israel hand over the five Lebanese detainees, who include also four Hezbollah prisoners of war captured in the July-August 2006 war.

   The families of Regev and Goldwasser had been following the transfer from their respective homes in the northern Israeli towns of Qiryat Motzkin and Nahariya. Their last hope turned into grief as they watched the live footage of the soldiers being handed over in coffins.

   Qiryat Motzkin's chief rabbi, David Meir Drukman, who was with the Regev family, told reporters outside the home that the family reacted with shock and a 'deafening silence' to the images, as neighbours and more distant relatives waiting outside burst into screams and weeping.

   Hezbollah for its prepared to celebrate the exchange as a major triumph, first with a symbolic ceremony on the Lebanese side of the border, to be followed by a red-carpet welcome at Beirut's international airport, and a mass rally at a stadium in the Lebanese capital's southern suburbs, considered a stronghold of the movement.

   Followers of the movement wearing yellow hats and carrying yellow Hezbollah flags headed towards the Naquora border crossing since the early hours of the morning.

   'Congratulations to our freed prisoners' and 'Our victorious resistance (Hezbollah) managed to free all Lebanese prisoners from the enemy's prisons,' read banners on the Lebanese side of the crossing.

   Footage shot by the Israel Prisons Authority, aired on Channel 10 television, earlier showed Kuntar and the other four Lebanese prisoners undergoing final identification formalities before their release from Israel's Hadarim prison north of Tel Aviv.

   Kuntar, in a grey sweatshirt and jeans, short hair, a moustache and appearing well-fed, answered in fluent Hebrew when asked by a prison doctor whether he had brought his medicine. He suffers from asthma.

   He and the other four, who had also shed their prison uniforms and wore civilian clothes, were then lined up and asked by a prison warder to say their full names as part of the identification process, before being led shackled to their transportation vehicle and heading to the border crossing.

A Hezbollah official, speaking on condition of anonymity, said they would be dressed into military fatigues and draped into Lebanese flags as soon as they crossed into Lebanon, where they would 'receive a red-carpet welcome' and 'greeted by Hezbollah comrades.'        Israeli President Shimon Peres late Tuesday signed a pardon for Kuntar, who was convicted by an Israeli court and sentenced to multiple life terms in prison for a 1979 attack into northern Israel, in which he and his men killed four Israelis, including a father and his four-year-old daughter whom they had taken hostage.

According to eyewitnesses, Kuntar shot the father in front of his daughter, then repeatedly crushed her skull against a rock with his rifle butt. And while a hero's welcome was awaiting him in Lebanon, in Israel he is widely seen as as a 'ruthless murderer.'

In a letter to Israel's justice minister, Peres emphasized the pardon meant no forgiveness. 'I won't forgive and I won't forget,' he wrote.

Kuntar's pardon came shortly after Israel's cabinet had given final approval to the deal Tuesday.