AFP - Two Swiss businessmen who are at the centre of a diplomatic tussle between Libya and Switzerland are being held in good conditions, Libya's deputy foreign minister was reported as saying on Sunday.

Swiss Foreign Minister Micheline Calmy-Rey has accused Libya of "kidnapping" the two, who have been prevented from leaving Tripoli for some 15 months in a row over the brief arrest in Geneva of one of Libyan leader Moamer Kadhafi's sons.

Last month, the men, who were mainly staying in the Swiss embassy, were asked by Libyan authorities to undergo a medical check-up.

Swiss diplomats and relatives said they had lost contact with the two since then and had no news of them.

"The two Swiss have not been kidnapped," the Swiss newspaper NZZ am Sonntag quoted Deputy Foreign Minister Khaled Kaim as saying.

They are being held at "a house" in a safe location, in "accordingly good circumstances, even if they would rather be in another place", he added.

The Swiss government said on Thursday that Tripoli repeatedly failed to honour pledges made in recent weeks to try to solve the row, despite a high-profile apology by President Hans-Rudolf Merz in August.

The spat erupted in July 2008 after police in Geneva arrested Hannibal Kadhafi and his pregnant wife in a luxury hotel over allegations that the couple had mistreated two servants.

Police detained the Kadhafis for two days, sparking outrage from Libyan authorities and retaliatory sanctions against Switzerland, although the charges were dropped after the two servants reportedly received compensation.

The businessmen have been identified by an employer or relatives as Max Goeldi, local manager for Swedish-Swiss engineering firm ABB, and Rachid Hamdani, who will be 69 on Tuesday.