Shane Bauer, 28, and Josh Fattal, 29, were arrested on the border with Iraq in 2009 where they said they were hiking. They were found guilty of illegal entry and espionage and were sentenced last month to eight years in prison.

On Wednesday, Iran’s judiciary rejected President Mahmoud Ahmadinejad’s announcement that Bauer and Fattal would be freed “in a couple of days.”

“The Iraqi president contacted top Iranian officials after the pair’s families asked for his mediation ... They will be handed over to the Swiss Embassy in Tehran early next week,” the Thursday edition of Sharq daily quoted Nazem Dabbagh as saying.

The Swiss Embassy represents US interests in Tehran since Washington broke off diplomatic ties after the 1979 Islamic revolution.

The lawyer for the US men said on Tuesday the two would be released on $500,000 bail each. Iran’s judiciary said their release was under review.

Bauer and Fattal were arrested on July 31, 2009, along with a third American, Sarah Shourd. She was allowed home on $500,000 bail in September 2010.

The release of the two could ease tension between Tehran and Washington, particularly before Ahmadinejad visits New York next week to attend the United Nations General Assembly.