Colombia will free hundreds of guerrilla fighters if rebel leaders release politician Ingrid Betancourt, who is in ill health after being held hostage for years in secret jungle camps, the government said.

President Alvaro Uribe signed a decree late on Thursday allowing the massive release of guerrillas from jail if French-Colombian Betancourt, kidnapped during her 2002 presidential campaign and ailing from hepatitis B, is set free, Peace Commissioner Luis Carlos Restrepo told reporters.

The decree was a bid to speed up efforts at swapping rebel-held politicians, police and soldiers for jailed guerrillas after months of haggling over conditions.

"The immediate release of Betancourt would be enough for us to consider the humanitarian exchange underway, in that we would conditionally suspend the sentences of guerrillas who are part of the agreement," Restrepo said.

The Revolutionary Armed Forces of Colombia, or FARC, is holding hundreds hostages for ransom and political leverage, including three American anti-drug contractors captured in 2003 and Betancourt.

The FARC, which took up arms in the 1960s, and the government have been deadlocked over conditions for exchanging dozens of such high-profile hostages for rebels held in government jails.

"The legal basis for a humanitarian exchange has been established and we have reduced the requirements as much as possible," Restrepo said.

Despite hard lobbying for a hostage swap by the families of kidnap victims and the French government, an agreement appeared less likely after Colombia killed the FARC's No. 2 commander in a March 1 raid carried out in neighbouring Ecuador.

Earlier on Thursday Colombian human rights ombudsman Wolmar Perez said Betancourt's health was "very, very delicate."

Reports received by Perez's office say Betancourt appears malnourished and her skin is raw with infected insect bites.

He said she suffers from hepatitis B and last month was brought by the FARC to be treated at first aid stations in jungle towns controlled by the guerrillas.

"The government has joined the national and international cry that the life of Ingrid Betancourt be saved. We cannot run risks in this case and there is no more time to wait," Restrepo said.

The rebels, who are funded mainly by cocaine smuggling and extortion, freed six kidnap victims earlier this year in deals mediated by Venezuela's leftist president, Hugo Chavez.

But plans for a wider hostage swap have bogged down with the government refusing the FARC's key demand that soldiers and police be pulled from a populated area in the west of the country to be used as the site of the exchange.

The government proposes the swap take place in an unpopulated area where the guerrillas would not be allowed to enter armed.