Talks have faltered over Israel's refusal to release anyone with "blood on their hands."
General Ilan Biran is expected in Berlin to meet Germany's secret service chief Ernst Uhrlau who has been leading the mediation efforts between the two parties for several months.
Public radio said that Biran would travel to Germany on Monday although other reports said he would visit later in the week. There was no confirmation from the defence ministry.
Israeli Prime Minister Ariel Sharon narrowly secured approval for the exchange deal which would involve Israel's release of some 400 Palestinians as well as dozens of Lebanese and other Arabs.
Hizb Allah is expected to handover of Israeli Elhanan Tannenbaum captured in October 2000 as well as the bodies of three Israeli soldiers.
The soldiers were captured from the occupied Shebaa Farms. Israel now believes they are dead though the resistance group has refused to clarify their fate.
As for Tannenbaum, Hizb Allah says he is a Mossad agent. Israel says he is a businessman lured to Abu Dhabi for what he believed would be a lucrative business deal.
Israel’s security apparatus is split over the swap, with the army and military intelligence services in favour while the external and internal security services, Mossad and Shin Beth, opposed to it.
Qantar ruled out
The Israeli cabinet conditionally approved the prisoner exchange deal on 10 November, but the deal has been held up by its insistence that no prisoner with Jewish "blood on his hands" can be freed. It particularly ruled out the release of Samir al-Qantar.
The 41-year-old former member of the Palestine Liberation Front received jail sentences totalling 542 years from Israel in 1980 for infiltrating a northern Israeli seaside resort, killing an Israeli man and an Israeli officer.
Samir al-Qantar has been held by Israel for 24 years
A four-year-old also died after her mother smothered her to death to cover her screams while they were hiding.
There have been reports that Hizb Allah had called the whole deal off over the status of al-Qantar. But Hizb Allah Secretary-General Sayyid Hasan Nasr Allah said last week that his group was still in talks with the Germans.
Both Hizb Allah and German mediators believe "negotiations must be kept secret at this sensitive stage in order to guarantee the best climate to reach a positive and permanent result," said Nasr Allah.
Among the Lebanese to be released are two prominent Hizb Allah leaders, Shaikh Abd al-Karim Ubaid and Mustafa Dirani, abducted by Israel as bargaining chips for the release of Israeli navigator Ron Arad, who has been missing since his plane came down over Lebanon in 1986.
'Closer than ever'
Israeli Foreign Minister Silvan Shalom held extensive talks in Berlin with Uhrlau and German Chancellor Gerhard Schroeder last month over the deal, voicing hope "that we are closer than ever to reaching some kind of agreement."
Despite hope for a deal on the prisoners, there has been little let-up in tensions between Israel and Hizb Allah.
At a rally with thousands of supporters in Beirut on Friday, Nasr Allah threatened to strike at the heart of Israel if it acted on its threats to attack Lebanon or Syria.
Nasr Allah also took a swipe at Sharon, branding him a "frog that looks frightened," ridiculing "his generals" and their "impotent army" as incapable of invading any Arab country.