Libya said yesterday it was ready in principle to pay compensation for the 1988 Lockerbie bombing that killed 270 people and address UN demands it accept responsibility for the airliner attack.
Foreign Minister Mohammed Abderrahmane Chalgam, speaking after ground-breaking talks between Libyan leader Muammar Gaddafi and Britain's junior Foreign Office Minister Mike O'Brien, also said Libya wanted to formalise relations with the United States.
"Regarding compensation, as a principle, yes we are going to do something on that topic," Chalgam told reporters after the talks in Gaddafi's Bedouin-style tent on a Mediterranean beach in the city of Sirte.
"Regarding responsibility, we are discussing this issue ... we are ready to get rid of this obstacle," he said.
British officials said the comments represented the clearest public declaration so far that Libya was prepared to meet conditions for the lifting of sanctions imposed over its involvement in the Lockerbie bombing.
Earlier Libyan leader Muammar Gaddafi held his first ever talks with a British minister, launching a new era in relations with the North African state which for years London said backed terrorism.
British Foreign Office minister Mike O'Brien and Gaddafi started their meeting in a Bedouin-style tent on a sandy Mediterranean beach in the city of Sirte, a Libyan official said.
O'Brien is seeking Gaddafi's cooperation in curbing terrorism after the September 11 attacks and in halting the spread of weapons of mass destruction.
A British source said the meeting took place after nearly five hours of talks between O'Brien and senior Libyan ministers at a hotel complex in the coastal city.
He stressed to them that Libya needed to ensure full compliance with United Nations resolutions calling for Libya to accept responsibility and pay compensation to families of the victims of the 1988 airliner bombing over Lockerbie, Scotland.
The source said O'Brien "made clear our concerns that even if they do comply...even then there is a need for reassurance on issues of weapons of mass destruction".
The Sirte talks with Gaddafi cap a cautious re-engagement between the former foes after years of hostility following the fatal shooting of a British policewoman outside Libya's London embassy, British-backed US raids on Libya and the Lockerbie bombing.
Britain's Foreign Office said government ministers had met Gaddafi decades ago but had never held talks.
Speaking on BBC radio from the Libyan capital Tripoli earlier yesterday, O'Brien defended his visit to Libya and talks with Gaddafi - long demonised in London for his support of republicans fighting British rule in Northern Ireland.
"It is more likely that Libya will move away from international terrorism if it is part of the international community, and that is why I am meeting Colonel Gaddafi," he said.
He rejected a comparison between Libya and Iraq saying Gaddafi was clearly moving towards compliance with international law while Iraqi President Saddam Hussein was not.
Gaddafi sent a government plane to collect O'Brien from a former US air base outside Tripoli and fly him to Sirte, where the Libyan leader was born.
In Sirte, the British minister's motorcade swept past murals welcoming guests to "the land of the great revolution".
"We are so proud to be Africans," another sign declared, reflecting Gaddafi's policy shift away from the Arab world and towards Africa.
But visitors to Sirte say there is another mural to the east of the city which recalls the days of Libya's open hostility to the United States and Britain.
It depicts former US President Ronald Reagan in a coffin while his close ally, Britain's ex-Prime Minister Margaret Thatcher, buzzes around him in the form of a mosquito.
O'Brien held talks on Tuesday with Deputy Foreign Minister Saad Mujber, which a British source described as "direct".
The source said Mujber had given a strong commitment to supporting the US-led fight against Osama bin Laden's al Qaeda network - blamed by Washington for the September 11 attacks on New York and Washington.
He said O'Brien had warned Libya that any sign it was seeking to acquire or build weapons of mass destruction would wipe out the three years of international rehabilitation since it handed over two Lockerbie suspects for trial in 1999.