The deal would be part of a reconciliation effort between Iraq's government and extremist Shiite groups.
Marking a gradual but dramatic shift in policy, the US appears prepared to release a major figure it accuses of masterminding the killing of five American soldiers in one of the most carefully planned insurgent attacks of this war, according to Iraqi and US officials.
Sheikh Laith al-Khazali, a senior member of a Shiite extremist group that the Iraqi government is trying to bring into the political process, was released from US custody over the weekend in what the Iraqi government called a wider reconciliation effort with extremist groups.
The release of his brother Qais al-Khazali, who heads the Iranian-backed militant group Asa'ib al-Haq and is directly linked to a lethal attack in Karbala in 2007, is expected to follow as talks progress, according to US and Iraqi officials. The officials asked not to be identified due to the sensitivity of the issue.
Freeing the two men, along with a Lebanese Hezbollah operative arrested by US forces at the same time in Basra two years ago, is also linked to the release of British hostages who have been held by Shiite extremists for the past two years.
"This isn't about freeing the hostages, it's about getting Asa'ib al-Haq to stop its attacks," says one senior American official, regarding the US motivation in releasing the Khazali brothers.
As US forces pull out of Iraqi cities and eventually out of the country, reconciling active insurgent factions is seen as crucial to keeping security gains from unraveling.
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