Party chief Abassi Madani and deputy Ali Belhadj were released after serving 12-year prison terms for threatening state security, senior FIS official Kemel Guemezi told Reuters.

The two had been detained in 1991 and sentenced in 1992.

The Interior Ministry declined to comment on the release.

Madani had been under house arrest in Algiers since 1997 while the younger and more popular Belhadj, a preacher known for his inflammatory sermons, had been held at a military prison 30 kms (18 miles) from the capital Algiers.

Belhadj, dressed in a traditional Algerian gray Djalaba robe and white hat, went straight to his local mosque in Algiers' Kouba district to pray where some 100 followers greeted him.

Belhadj made no comments.

"This is a very happy day for us. We have been expecting the release for a long time," Abdelmalek Aniss, 37, told Reuters at the mosque where there was also a large police presence.

Some members of the political elite fear the two FIS leaders may reignite the Islamist flame ahead of presidential elections in April 2004.

The pair had been arrested shortly before army-backed authorities scrapped the second round of the 1992 legislative elections. Between 100,000 and 150,000 people were killed in the resulting violence.

The FIS, which sought to create an Islamist state, gradually lost influence over the largely Muslim North African country of 32 million inhabitants after it was outlawed in 1992.