By Patrick Markey

BOGOTA, June 4 (Reuters) - Colombia will temporarily free a jailed guerrilla leader to try to set up peace talks and arrange the release of rebel hostages, including a French-Colombian politician and three Americans, a top official said on Monday.

Deputy Justice Minister Guillermo Reyes told Reuters rebel leader Rodrigo Granda would seek to broker negotiations between President Alvaro Uribe's government and the Revolutionary Armed Forces of Colombia or FARC, the country's largest rebel group.

"He will leave to act as a representative in charge of negotiation efforts," Reyes said by telephone. "The idea is create space to negotiate, to reach agreements, to converse with the FARC leadership over a peace process."

Granda, known as the FARC's foreign minister, will be given conditional release under the supervision of Colombia's peace commissioner, Reyes said. He was arrested in 2004.

The measure bolsters hopes for a negotiated deal to free hostages held for years by the FARC in Latin America's longest-running guerrilla war, including French-Colombian Ingrid Betancourt and the three Americans snatched in 2003.

Local television showed images of Granda dressed in white and carrying a rucksack as he was escorted out of La Dorada prison in Caldas province west of Bogota. He was flown by helicopter to Bogota.

Granda's release is part of Uribe's plans to free some 190 jailed rebels in a unilateral gesture he hopes will prompt FARC guerrillas to release hostages. The FARC on Sunday rejected Uribe's plan and reiterated a demand he pull troops back from an area the size of New York City as a condition for talks.

Betancourt is one of the highest profile kidnap victims in Colombia. A dual French-Colombian citizen, she was kidnapped in 2002 campaigning for the presidency along with her assistant.

The three U.S. contract workers -- Marc Gonsalves, Thomas Howes and Keith Stansell -- were captured when their aircraft went down in the jungles while on a drug eradication mission.

Violence has dropped sharply under Uribe's U.S.-financed campaign to end the fighting. He has succeeded in pushing rebels back into the jungles and mostly disarmed illegal paramilitaries who once fought them in a dirty war fueled by the country's cocaine trade.

France, Spain and Switzerland have been involved in seeking negotiations with the guerrillas, who have held hundreds of hostages for as long as eight years.

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