A planned prisoner exchange between Israel and Lebanon is running into trouble after new threats emerged from both sides.

Israeli officials are expected to meet soon with German mediators in a bid to prevent the collapse of the proposed prisoner swap.

The negotiations have reached a sensitive stage, with both the militant Islamic group Hezbollah in Lebanon and some Israelis warning they will try to prevent the deal going ahead.

The family of missing Israeli navigator Captain Ron Arad, whose plane was shot down over Lebanon in 1986, says the Hezbollah must agree to provide information on his whereabouts.

Their lawyer, Eilad Shraga, said it is also wrong to release Lebanese prisoner Mustafa Dirani, who personally held Captain Arad captive and tortured him for a year before reportedly selling him to Iran. "We are not giving up. There is a probability that we will submit a petition to the High Court of Justice and we will try to prevent Dirani to leave Israel," he said.

The Arad family is not the only group protesting.

Hezbollah leader Sheikh Hassan Nasrallah said the proposed prisoner swap would only go ahead if Israel agreed to include Lebanese terrorist Samir Kantar. Israel is holding him for the murder of three members of an Israeli family and an Israeli policeman in 1979.

Israel has agreed to set free hundreds of prisoners, most of them Palestinians and some Lebanese, but insists Kantar will not be among them.

Ahron Perlman, a spokesman for Israeli Prime Minister Ariel Sharon, said prisoners who killed Israelis will remain behind bars. "Approximately 400 Palestinian prisoners and detainees will be released to Judea, Samaria [the West Bank] and Gaza. These prisoners and detainees will be selected according to the criteria that those with blood of their hands will not be released. Several dozen prisoners without blood on their hands from Lebanon, Syria, Morrocco, Sudan, and Libya will be released to their respective countries, except for several of the Lebanese prisoners who were involved in incidents in southern Lebanon in which [Israeli soldiers] were killed," he said.

Hezbollah's demand for Samir Kantar's release follows the decision of the Israeli Cabinet on Sunday to approve the prisoner exchange in order to secure the return of Israeli businessman Elhanan Tannenbaum, kidnapped by Hezbollah three years ago.

The deal also includes the bodies of three Israeli soldiers kidnapped and killed by Hezbollah, a group that has sworn to destroy Israel and is classified by the State Department as a terrorist organization.

A father of one of the soldiers, Haim Avraham, said he applauds the Cabinet for having the courage to make a tough decision. "This is the right time for this decision of the government to return our children back from captivity," he said.

The decision was approved by just one vote in what several ministers said was the most difficult decision they ever had to make.

One of the Cabinet Ministers who voted against the deal is Effi Eitam, who argues that Israel's acceptance is likely to encourage more terrorism. "No question it is a signal of weakness which I am very much worried will be used by some other terrorist organization in order to blackmail Israel and to erode its capability to resist terror," he said.

While other ministers have expressed similar sentiments, Prime Minister Sharon insisted that the Cabinet had no choice but to approve the deal. Mr. Sharon said that to have rejected the offer would have resulted in the Hezbollah executing Mr. Tannenbaum, their current Israeli captive.