Kidnappers Friday released two West German hostages but said the life of a third was in danger and demanded that authorities in Cyprus free an unidentified prisoner, a Palestinian official and security sources said.

The two released West Germans, a man and a woman working for the West German relief agency ASME Humanitas, arrived in a taxi at the gate of the headquarters of the agency at 4:30 a.m. Friday.Two hours after their release, Abu Ali Wajeeh, the commander of the PLO Fatah "military police" in Sidon, said a third West German was being held captive by the unidentified abductors.

"A third German national was with the man and woman, and I know from the released Germans that he remained hostage in the hands of the abductors. His name is Marx Keesh," Wajeeh said. West German authorities could not confirm the name of the captive.

Wajeeh said Palestinian gunmen were placed on full alert to try to locate the third captive but that he did not believe the man would remain in captivity for long. He did not elaborate.

A Palestinian source said the abductors informed the Palestinian command that "the life of the German hostage was in danger."

"They are demanding the release of a prisoner detained in Cyprus," the Palestinian source said. "No more details were available."

The prisoner held in Cyprus was not identified, but there are a number of Arabs and one pro-Palestinian Briton held in Cypriot jails on terrorist charges.

The PLO representative in Lebanon, Zeid Wehbeh, hinted in a statement to United Press International that the West Germans may have been abducted by a Palestinian faction.

"There are some Palestinian parties which have interest in carrying out such kinds of action," Wehbeh said without elaborating.

The West Germans were working for ASME Humanitas, which carries out relief work in southern Lebanon's Palestinian refugee camps, despite a warning by their government that travel in Lebanon was dangerous, officials said.

Palestinian sources said the third West German arrived in Lebanon 10 days ago.

The two released hostages, Heinrich Struebig, 48, and Petra Schnitzler, 26, arrived in a blue Mercedes taxi at the ASME headquarters, opposite a base operated by the Palestine Liberation Organization's mainstream Fatah group.

The pair stepped out of the taxi and were hurriedly received by a Fatah field commander who was waiting for them in a car equipped with a walkie-talkie.

The commander paid the taxi driver $4 and ushered the freed West Germans into the ASME compound.

"We don't want to talk to the press. Let them go away," the woman said nervously, addressing the Fatah commander.

Struebig appeared relaxed and in good shape, while the woman seemed extremely nervous and haggard with her two hands smeared with dirt.

The Fatah commander, who declined to be named, refused to say how they were freed and by whom they had been held.

"We will comment on this issue later in the day," said the commander, clad in military fatigues with a gun strapped around his waist.