"We played a role in the release of five Arab women in exchange for the freeing of the two Kurdish girls," said Colonel Aras al-Kaki, chief of the northern Iraqi city's anti-terrorism forces.

"The five women had been arrested for terrorism-related crimes, and two are the wives of senior imprisoned members of Ansar al-Sunna," an Islamic group linked to Al-Qaeda, he said, adding the exchange had taken place on Thursday.

Security sources said the kidnappers had demanded the release of seven prisoners, including two men, with links to Ansar al-Sunna.

Kaki said only the five women were freed.

The father of the kidnapped girls in their early 20s said that insurgents wearing military uniforms had stormed his home near Kirkuk early on Thursday.

"They entered my home, tied my hands and tried to kidnap three of my daughters," said the father, Walid Jalal al-Kaki, who shares tribal links with the security official.

"I managed to free myself and grab one of their guns, killing one and wounding another, and managing to free one of my daughters," said the 55-year-old father, who is close to the Kurdish Democratic Party of regional president Massud Barzani.

"I saw four of them, but surely there were more. Two of them managed to flee with my daughters," added the father, a businessman.

"I am very happy about this outcome, and to have my daughters here, even though they are in a bad mental state. One of them was hit in the head with a rifle butt," Kaki said.

"If we hadn't resolved this crisis in this manner maybe Kirkuk would have witnessed large clashes and violence," the police colonel said. He said Sunni tribal elders had intervened to arrange the exchange.

Kirkuk is a tense and fragile mix of Kurds, Sunni Arabs, Turkmen, Shiites and Christians.

Women's honour is a sensitive issue that could ignite ethnic strife.

"The aim of this act was mainly to create problems between Arabs and Kurds," the colonel said.

Kidnappings have become common in Iraq since the 2003 US-led invasion. But it was the first time that Kirkuk police had agreed to kidnappers' demands to free people with links to insurgents, security sources said.