Israel's cabinet narrowly approved a prisoner exchange with the Lebanese group Hezbollah Sunday, after vigorously debating the controversial deal for eight hours.

Israeli Prime Minister Ariel Sharon's cabinet ultimately voted 12-11 in favour of the swap.

Under the deal, some 400 jailed Palestinians and Lebanese are to be traded for a kidnapped Israeli businessman and the bodies of three Israeli soldiers.

Negotiations over the deal were led by German mediators and took literally years to complete.

Even though the vote is in, the debate isn't over.

Israeli cabinet minister Uzi Landau, for one, believes the move will only send the wrong signals.

"The message that might come out is that kidnapping is rewarding and terrorism is rewarding," Landau told The Associated Press.

It is not immediately clear when or where the exchange would take place.

Hezbollah declined to comment immediately upon hearing that Israel had accepted the deal. On Saturday, Hezbollah leader Sheikh Hassan Nasrallah said the swap was off if it did not include all Lebanese prisoners.

In Israel, the trade had faced criticism for Sharon's willingness to release prisoners without ensuring in exchange information about the fate of Ron Arad, who was last seen in 1987 after parachuting from his fighter-bomber over Lebanon.

Since his disappearance, Arad has become a national icon in Israel. His family supporters have lobbied against the deal because it would see the release of Mustafa Dirani, who is believed to have been one of Arad's captors.

Arad's family accused Sharon, himself a former general, of effectively abandoning a soldier on the battlefield.

It isn't known yet whether the swap will include Fawzi Ayoub, a Canadian citizen of Lebanese origins, who is being held for alleged militant connections.

Ayoub's lawyer is confident he will be freed. "Taking into consideration Hezbollah doesn't give up on its people, and Fawzi Ayoub is considered by Israel to be a Hezbollah person," said, Lea Tsemel.

The actual exchange could go ahead as early as Nov. 13.

One deal killer, however, is the fate of Samir Kuntar, jailed in 1979 for an attack that killed three people. The Israelis say he has blood on his hands and so they won't free him. If Kuntar isn't freed, Hezbollah's leader said the whole deal might collapse.