Israel handed the bodies of two suicide bombers back to Hizbullah on Monday.
The move was in return for information about the health of Israeli civilian Elhanan Tennenbaum, who was captured by Hizbullah in October 2000.
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There is cautious optimism in Jerusalem that the Lebanon-based terror organization is serious about a prisoner swap.
However, on previous occasions Hizbullah has reportedly changed its demands at the last minute making exchanges impossible.
Hizbullah is currently holding what are believed to be the bodies of three Israeli soldiers, and has information on the whereabouts of missing Israeli airman Ron Arad.
Israel has at least 13 Hizbullah prisoners, likely to be released in any deal.