Azerbaijan freed 17 Armenian prisoners of war Tuesday following US mediation, Armenian Prime Minister Nikol Pashinyan said, days after the arch-foe neighbours re-launched Western-facilitated peace talks.

The move highlights the growing Western engagement in the volatile Caucasus region, where Russia -- distracted by its war in Ukraine -- is visibly losing influence after decades of domination.

Last month, at least 286 people were killed on both sides before a US-brokered truce ended the worst clashes since the neighbours' 2020 war.

Baku and Yerevan fought two wars -- in 2020 and in the 1990s -- over the contested region of Nagorno-Karabakh, an Armenian-populated enclave of Azerbaijan.

"I highly appreciate the efforts of the United States (in) assisting to return our 17 POW," Pashinyan said Tuesday on Twitter.

He expressed hope for more "progress in resolving both humanitarian issues and establishing peace in the region" -- with international mediation.

US Secretary of State Antony Blinken, who is travelling in Latin America, initiated a three-way telephone conversation Tuesday with Armenian Foreign Minister Ararat Mirzoyan and his Azerbaijani counterpart Jeyhun Bayramov.

Blinken hailed the release of the prisoners and "reiterated our commitment to helping Armenia and Azerbaijan resolve issues peacefully," State Department spokesman Ned Price said.

Blinken also "expressed our appreciation for the positive steps Armenia and Azerbaijan are taking towards reaching a sustainable peace agreement."

The Azerbaijani and Armenian ministers met jointly with Blinken on September 20 on the sidelines of the UN General Assembly, and the two held talks again together on Sunday in Geneva.

The Geneva talks followed an EU-mediated meeting on August 31 in Brussels between Pashinyan and Azerbaijani President Ilham Aliyev.

With Moscow increasingly isolated on the world stage following its February invasion of Ukraine, the United States and the European Union have taken a leading role in mediating the Armenia-Azerbaijan normalisation process.

The six-week war in 2020 claimed the lives of more than 6,500 troops from both sides and ended with a Russian-brokered ceasefire.

Under the deal, Armenia ceded swathes of territory it had controlled for decades, and Moscow deployed about 2,000 Russian peacekeepers to oversee the fragile truce.

When the Soviet Union collapsed in 1991, ethnic Armenian separatists in Nagorno-Karabakh broke away from Azerbaijan. The ensuing conflict claimed around 30,000 lives.