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United Nations Secretary General Kofi Annan said in the Saudi city of Jeddah on Monday that Israel and Lebanon's Hezbollah accepted UN mediation on freeing two captive Israeli soldiers.

During a news conference in Jeddah, Annan, who arrived in Saudi Arabia Monday on the latest leg of his Middle East tour, told reporters that "the two sides have accepted the effort of the secretary-general to help solve this problem," adding that he would appoint a mediator to work secretly with the two sides.

It is the first time for Israel, which has insisted on an unconditional release of the soldiers, to agree on indirect contacts with the Lebanese Shiite group through a mediator.

On July 12, Lebanon's Shiite group Hezbollah guerillas snatched two Israeli soldiers and killed eight others during a cross-border attack that triggered Israel launched a massive assault against Lebanon aimed at rescuing the captive soldiers and halting rocket attacks on northern Israel.

However, Israel failed to gain the captive soldiers back when the 34-day-long fighting ended on Aug. 14 under a UN-brokered ceasefire resolution authorizing an expansion of the existing UN force in Lebanon to 15,000 troops to help Lebanese troops take control of southern Lebanon as Israel withdraws.

After Annan arrived in the Gulf country, he held talks with Saudi Arabia's King Abdullah on the latest development of the Middle East region.

The UN chief has already visited Lebanon, Israel, the Palestinian territories, Jordan, Syria, Iran and Qatar. He is scheduled to fly on to Egypt and Turkey later.

His Middle East tour aimed to be focused on efforts to shore up a three-week old truce in Lebanon and find a way out of the standoff between Iran and the international community over Tehran's nuclear programme.

Editor: Yan