The neighbours had been locked in a protracted conflict for control of Karabakh, which Azerbaijan reclaimed in September after a lightning offensive against Armenian forces who had controlled the enclave for three decades.

Normalisation talks, mediated separately by the European Union, the United States and Russia, have since stalled, despite both countries saying a peace agreement could be signed by the end of this year.

On Wednesday, "Azerbaijan freed 32 Armenian military, Armenia freed two Azerbaijani military," Azerbaijan's state commission for prisoners of war said in a statement.

It added that "the exchange took place at the Gazakh sector of the Azerbaijani-Armenian state border."

"Armenian soldiers were handed to Armenia after the International Committee of the Red Cross examined their health and made a positive conclusion," the statement said.

Armenian Prime Minister Nikol Pashinyan published on his Facebook page a list of 32 freed Armenian servicemen.

This happened after Baku and Yerevan last week released a joint statement pledging to seize "a historical chance to achieve a long-awaited peace in the region" and announced a POWs swap.

The European Union, United States, as well as regional powers Turkey and Russia praised the statement as a "breakthrough."

Yerevan said in November that a total of 55 Armenian prisoners of war were being held by Baku.

The number included six civilians, 41 military, and eight separatist leaders arrested in the wake of Baku's military operation in September.