Occupied Jerusalem: A month after he vowed not to negotiate with Hezbollah over the release of two captured soldiers, Israel's Prime Minister Ehud Olmert has nominated a spy to craft a deal for their release.

Udi Goldwasser and Eldad Regev were captured in a cross-border raid on July 12, leading to the month-long Israeli offensive. Another soldier, Gilad Shalit, had earlier been seized in Gaza.

But following 33 days of fighting that failed to crush Hezbollah or free the soldiers, Olmert has appointed Ofer Dekel, a trusted ally from the Israeli equivalent of MI5 to open discussions with the group.

Israel is reportedly willing to give up 13 Hezbollah fighters in its custody, plus the bodies of many more killed in the last month.

Dekel, a former paratrooper, one-time deputy head of the Shin Bet security service and fluent Arabic speaker, is seen as a brilliant officer with decades of intelligence-gathering experience.

The appointment is nonetheless a humiliating U-turn for Olmert, who is facing bitter criticism in Israel over his bungled handling of the war.

The prime minister is seeking a political lifebelt after being forced last week to abandon the West Bank withdrawal plan on which he and his Kadima Party were elected in March.

OOlmert restated his security credentials in the early hours of yesterday when Israeli soldiers arrested Nasser Al Shair, the Palestinian Deputy Prime Minister, at his home in Ramallah as part of a crackdown on the Hamas-dominated cabinet that began after Cpl Shalit's capture.

Dekel became close to Olmert when the prime minister was the mayor of occupied Jerusalem and Dekel was Shin Bet chief for the city and the Palestinian West Bank. "Occupied Jerusalem was target number one for Palestinian bombers," said an intelligence official who worked for decades with Shin Bet and knows Dekel well.

"Ofer briefed Olmert every two or three days. Ofer is a very talented guy. He is not seen as a killer, but when you're at the top you need a sharp mind, not necessarily a knife between your teeth. He is a strategist, a good choice to conduct the talks."

Israel has previously negotiated with Hezbollah for the release of captured troops or their bodies, most recently in 2004 when it released hundreds of prisoners in exchange for a businessman and the remains of three soldiers.

Even so, Olmert began this war promising that there would be no end to the shooting until Goldwasser and Regev were freed.

Eyal Regev, Eldad Regev's brother, said: "Not only is the return of the kidnapped soldiers absent from the operative clause [of the resolution], even the demand to receive a sign of life or a visit by the Red Cross is not in the decision."

Now Olmert is pinning his hopes on Dekel to secure a swift, morale-boosting deal to free the soldiers. It will be a testing challenge even for such an experienced negotiator.

Uri Lubrani, formerly Israel's chief negotiator for the return of missing soldiers in Lebanon, said: "Talks are a very difficult and complicated task. At the beginning there will be very high prices set and demands of all sorts. They will have to be worked down to a deal that is acceptable.

"In order to negotiate you have to be prepared to do things that in the normal course of action you wouldn't. Politically, it is very sensitive."

In granting concessions, however, Israel is apparently unwilling to give up Samir Kuntar, the longest-serving Lebanese prisoner in Israel, for fear of giving a fillip to Hassan Nasrallah, Hezbollah's leader.