Radio Ya in Managua interrupted programming to report that the Contras had freed their five hostages, while a guerrilla in Managua said his group was about to free their captives, who include the Vice-President, Virgilio Godoy.
The stand-off began last Thursday when a group of former Contras led by Jose Angel 'The Jackal' Talavera seized dozens of military and civilian officials and demanded the sacking of General Humberto Ortega, the Sandinista army commander, in return for the hostages' freedom. The next day, in retaliation, more than 20 heavily armed gunmen stormed the National Opposition Union (UNO) and took hostage dozens of right-wing opposition politicians, including Mr Godoy and Alfredo Cesar, a former political leader of the Contras.
At dawn yesterday, the two groups each released all but five of their hostages, after talks with two negotiating commissions set up, in an unprecedented show of unity, by the government, Sandinistas and opposition.
Reports of the releases came after the Interior Minister, Alfredo Mendieta, a member of the negotiating team, said the former Contras 'have agreed with us that this is not the proper forum for political demands'. During the talks yesterday another member of the team, Archbishop Juan Mata, whose district includes Quilali, told the rebels: 'It's true that the government has many problems, but they are not the enemies of the people as you say.'
The crisis is the latest expression of discontent in Nicaragua, which has remained impoverished and unstable despite the election in 1990 of Violeta Chamorro, the US-backed candidate who hoped to unite the country and lead it out of war, poverty and economic malaise.
Soldiers from both sides in the civil war have regrouped to demand land and aid; the 'Recontras', former rebels, are also angry that the President has worked with the Sandinistas, still the largest political party, in a pragmatic attempt to govern the country.
While Mrs Chamorro is extremely unlikely to sack Gen Ortega, brother of the former Sandinista president, Daniel Ortega, she may agree to sacrifice lower- level Sandinista officials to meet some Contra demands.