"They were released, they're on the way and they will be handed over to the Indian ambassador," said Shah Mahmoud Miakhel, a close aide to Interior Minister Ali Ahmad Jalali.

Miakhel declined to comment further.

The engineers were abducted on December 6 during a shopping trip in southern Zabul province, where they were working on the US$270-million refurbishment of the Kabul-Kandahar highway, the country's main transport artery.

It was unclear if the government had made any concessions to the kidnappers to secure their release.

On Monday, an official in Zabul said Taliban rebels had sent a letter demanding the release of 55 of their prisoners in return for the engineers.

A Taliban spokesman had previously claimed responsibility for abducting the Indians but issued no demands. Last week, Jalali said the government knew who was holding the Indians and that it was negotiating for their release.

The hostages, identified by their company as Murali and Varadayya, worked for one of several foreign contractors that helped retool the highway, which was inaugurated last week by President Hamid Karzai and US officials.

The road has come to symbolise efforts to revive the impoverished country after more than two decades of conflict -- but also its continued instability as it attracted a string of Taliban attacks.

Four security guards were killed in August and mine-disposal operations along the road were suspended last month after a car hijacking.

A Turkish engineer working on the same road was kidnapped by Taliban in late October, but released a month later after two Taliban prisoners were freed -- although Afghan officials denied any deal was struck.

The same day the Indians were kidnapped, a US warplane strafed a mountain village in neighboring Ghazni province in an attempt to kill a Taliban militant suspected of attacks on the road.

Instead, nine children were killed. The US military acknowledged last week that the militant escaped.

The released Indians said they were not mistreated and appeared in good health.