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Information received from Hezbollah during a deal carried out on the northern border yesterday is hoped to bring to a conclusion the mystery surrounding the fate of missing Israel Air Force navigator Ron Arad, sources said yesterday.

Israel and Hezbollah carried out an exchange yesterday evening at the Rosh Hanikra border crossing, which included three bodies and a seriously ill prisoner. The transaction, carried out with the help of the United Nations and the Red Cross, is the first overt sign of a mediating process that began six months ago for the release of the two abducted reservists, Eldad Regev and Ehud Goldwasser.

Israel received the body of Gabriel Dawit, a citizen who drowned near Haifa in January 2005 and who was carried by the sea to Lebanon's shores. For its part, Hezbollah received the corpses of two of its fighters killed during the Second Lebanon War.

Israel also released Hassan Aqil, from the village of Jabin.

As part of the deal, Israel also received sensitive information linked to the case of Arad, missing since 1986 when his jet crashed in Lebanon.

Senior defense sources told Haaretz last night that the deal reflects a certain degree of progress in contacts with Hezbollah, but negotiations are still slow, and at this stage there is no expectation that Regev and Goldwasser will be freed in the near future. The abduction of the two reservists on July 12, 2006, sparked the Second Lebanon War.

The exchange took place under a nearly-total media blackout, with both Israel and Hezbollah apparently wary that a leak would scuttle the deal.

During the past week, final preparations for the exchange were carried out in Israel with the coordination of the Israel Defense Forces, the Prisons Service, the United Nations and the Red Cross.

There was considerable tension at the Prime Minister's Bureau yesterday during the early afternoon, when the first reports on the exchange emerged in the international media.

Hezbollah was also keen to keep the exchange under wraps, and the Shi'ite organization announced yesterday on its television station, Al-Manar, that it would release the full details of the deal later today.

However, the group said that "it remains committed to its promise to gain the release of all the prisoners [held in Israel]."

Coordinating the entire operation on the Israeli side was Ofer Dekel, who has been appointed by Prime Minister Ehud Olmert to take charge of the talks for the release of the soldiers held by Hezbollah.

Dekel stayed at Rosh Hanikra until the deal was completed, and then informed the prime minister on the results of the exchange.

The transfer of the bodies was carried out by Red Cross and United Nations Interim Force in Lebanon officials, although the latter were not involved in the negotiations that Haaretz was told were carried out by German mediators.

The Israeli citizen whose body was recovered is Gabriel Dawit, a 28-year-old civilian from Be'er Sheva who disappeared without a trace more than two years ago. A Foreign Ministry search included help from the Red Cross, which inquired in neighboring countries about his whereabouts.

Approximately six months ago, German mediators in charge of the Regev and Goldwasser case at the United Nations, informed Israel that Hezbollah had Dawit, and provided them positive proof of identity.

Following negotiations, the main points of the deal were concluded. These included the release of Hassan Aqil, a 50-year-old member of Hezbollah, who suffers from serious medical problems, and the corpses of two Hezbollah fighters killed during the war last year.

For its part, Hezbollah agreed to deliver Dawit's body and sensitive information related to the Ron Arad disappearance.

A senior political source said yesterday that Israel is dealing with the information cautiously. "We have had a number of disappointments in the past," the source said.

Three years ago, Hezbollah gave Israel bone fragments that it claimed belonged to Arad, but a close examination showed this to be false.

At all stages of the negotiations in recent months, in addition to the prime minister, Defense Minister Ehud Barak and Foreign Minister Tzipi Livni were regularly updated on developments.

According to a senior defense source, "The current deal is part of a series of contacts. This is not the first stage of a deal whose future stages are prearranged. This is progress that improves the atmosphere."

However, the same source stressed that it was necessary to "lower expectations. These are complicated negotiations, that may last many more months."

At this stage, Hezbollah is stubbornly refusing to offer any information on the two abducted soldiers, conditioning any such development to Israel's release of many prisoners, which will then be followed by the release of yet another group.

For its part, Israel insists that the deal be carried out in one stage that includes the release of the two soldiers in exchange for prisoners.

On Sunday, the details of the deal were brought before a special limited cabinet meeting by Dekel and representatives of Mossad and Military Intelligence. The defense officials expressed their support for the deal and said that the cost was reasonable.

During the meeting, Olmert said, "The deal seems reasonable and appropriate," adding that "its advantage is that it energizes a process and creates a feeling that it is possible to reach an understanding with Hezbollah."

In Israel, the deal is viewed as a confidence-building measure.

In talks with the families of the two abducted soldiers, Olmert said last night that, "This is not a separate deal but part of an overall process."

The prime minister also expressed his condolences to the Dawit family.