They also blew up a hostage slaughterhouse where masked militants had filmed foreign and Iraqi victims begging for their life or having their heads chopped off -- images that are often broadcast on Arabic television.

"Marines located the driver of the two French reporters," the spokeswoman said, referring to Mohammed al-Jundi.

But she was unable to say when he was found and had no information on the fate of French reporters Christian Chesnot of Radio France Internationale and Georges Malbrunot of Le Figaro newspaper.

The three were abducted on August 20 south of Baghdad by a group calling itself the Islamic Army of Iraq, which is believed to be mainly based in Fallujah, where US-led troops have been engaged in a massive offensive to retake the city from rebels.

French Foreign Minister Michel Barnier said Sunday that his government knew that the hostages were "still alive a few days ago," after a botched attempt in September to rescue them.

Hopes they would be released have been dashed several times, most notably when French lawmaker Didier Julia announced at the end of last month that their liberation was imminent.

In a grim reminder of how Fallujah earnt its reputation as a rebel enclave, Major General Abdul Qader Mohan, chief spokesman for a joint military assault in Fallujah, said Wednesday that a number of hostage "slaughterhouses" had been uncovered along with lists of names.

Marines told AFP that they blew up one of the houses on Thursday where much of the butchering took place.

In the house they found grisly videos of captives, a camera and a black flag, which is often draped in the background of the hostage in pictures broadcast on television or published over the Internet.

More than 200 foreigners have been kidnapped in Iraq since April by different militant groups and many have been beheaded.

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