The Maoists have held hostage Italian tour operator Bosusco Paolo and Biju Janata Dal legislator Jhina Hikaka since March 14 and March 24, respectively.
Paolo was abducted with another Italian, Claudio Colangelo, 61, from a forested area on the border of Ganjam and Kandhamal districts. The rebels March 25 released Colangelo as a "goodwill gesture" but kept Paolo, 54 insisting the government to fulfil their demands.
"Considering the safety of Jhina Hikaka, the young tribal MLA of Laxmipur, it has been decided by the state government to facilitate the release of 15 members of Chasi Mulia Adibasi Sangha and also eight left wing extremists who are now lodged in jails," Patnaik told reporters.
"Further, considering the demands of the Odisha state organizing committee of the CPI-Maoist for the Italian national, who was abducted in the Kandhamal district, it has been decided to facilitate the release of four persons from the list given by the mediators for the Maoists," he added.
After the announcement, Patnaik also appealed to the Maoists to immediately release both the hostages unharmed and in good health.
While the Italian was abducted by the Odisha unit of the Communist Party of India-Maoist (CPI-Maoist) from Kandhamal district, the legislator was kidnapped by the Andhra-Odisha border special zonal committee from Koraput district.
The group responsible for kidnapping the Italian insisted the government fulfill 13 demands, including a ban on the visit of tourists to tribal areas, a halt to anti-Maoist operations and the release of several under-trial prisoners.
Two negotiators backed by them were holding talks with the state government for the past several days on the Maoist's demands.
The legislator's abductors were demanding the release of several activists of the Chasi Mulia Adivasi Sangh (CMAS) who they say have been booked on false charges in Koraput and Malkangiri districts.
The legislator's abductors had Tuesday refused to appoint any mediator for talks and had set a Thursday deadline for the government to decide on their demands.
Although the decision to release the prisoners many bring an end to the weeks-long hostage crisis, the Maoists have, however, not yet responded to the chief minister's announcement.