Israel and Lebanon were making final preparations on Monday for a high-profile prisoner swap, with Hizbullah ready to celebrate what it hails as a major victory over its Israeli foes.

Israel is to free five Lebanese prisoners on Wednesday, including a militant held for three decades over a grisly triple murder, in exchange for two soldiers captured by Hizbullah in a deadly cross-border raid two years ago that triggered a devastating war in Lebanon.

It is also set to transfer to Lebanon the bodies of almost 200 Palestinian and Lebanese fighters, some from Hizbullah, as well as release a number of Palestinians under the swap mediated by a U.N.-appointed German diplomat.

The Iranian and Syrian-backed Shiite movement Hezbollah plans a hero's welcome for its fighters, with celebratory banners and flags lining the main highway from the Israeli border at Naqura to the southern port city of Sidon.

"We are a people who will not abandon our detainees in prison," reads one banner, taken from a pledge by Hizbullah chief Hassan Nasrallah. "Thanks to the weapons of the resistance, we will free our prisoners," says another.

The swap, which still requires final approval from the Israeli cabinet, is expected to take place with Red Cross supervision at around 0600 GMT at the Naqura crossing point on the border.

The Lebanese daily As-Safir, considered close to the Syrian- and Iranian-backed opposition, said: "In a few days, spring will come back... changing the cycle of the seasons."

Al-Akhbar, another pro-opposition daily, said the released prisoners were to appear in public in combat gear.

In contrast to Hezbollah's celebrations, the mood in Israel ahead of the swap is somber, reflecting the government's belief that the two captured servicemen -- Ehud Goldwasser and Eldad Regev -- are dead.

An Israeli official said the exchange will take place after military authorities identify Regev and Goldwasser, either dead or alive.

Israeli cabinet ministers are expected to give final approval to the deal on Tuesday after being briefed by security officials on a Hizbullah report on the fate of Israeli airman Ron Arad, who went missing after his plane was shot down over Lebanon in 1986 during the civil war.

In its report, Hizbullah said Arad had died in captivity, but Israel remains skeptical.

Israel on Monday transferred four Lebanese detainees -- Khaled Zidan, Maher Kurani, Mohammed Sarur and Hussein Suleiman -- to another prison where they joined Samir Kantar, who is serving multiple life sentences for a triple murder in Israel in 1979.

A spokeswoman for the International Committee of the Red Cross said the ICRC was preparing to oversee the prisoner exchange.

"We will bring 11 Red Cross trucks from Jordan to transport the bodies and we will also interview the detainees before they are transferred to Lebanon," Yael Segev Eitan told AFP.

Lebanon is planning a welcoming ceremony in Naqura, a security official said, adding that President Michel Suleiman, Prime Minister Fouad Siniora and parliament speaker Nabih Berri would later greet the prisoners at Beirut airport.

Hizbullah is staging its own ceremony in its stronghold in the southern suburbs of Beirut, where a speech by Nasrallah is to be broadcast on a giant television screen.

In June, Hizbullah held celebratory ceremonies when Israel freed and then deported to Lebanon a convicted Hizbullah spy, Nessim Nisr, who had served six years in prison.

At the time, Hizbullah handed over the remains of Israeli soldiers in what was seen as a confidence-building measure.(AFP)