Factbox - Libyan relations with the West since the 1980s

In the 1970s, Libyan leader Muammar Gaddafi set out to use oil wealth to revolutionise the economy and by the end of 1982 had nationalised 70 per cent of the oil industry.

Tensions with the United States led to a US embargo on Libyan oil in 1982 and US oil companies pulled out.

Washington recalled its ambassador after a mob sacked its embassy in 1980. A year later US fighters shot down two Libyan jets over the disputed Gulf of Sirte and US President Ronald Reagan accused Libya of sending a squad to assassinate him.

In January 1986, Reagan moved to isolate Libya after accusing Gaddafi of sponsoring international terrorism and harbouring the Palestinian Abu Nidal guerilla group, blamed for attacks on airports in Rome and Vienna the previous month.

Mr Reagan announced new economic sanctions against Libya, banning trade, loans and travel to Libya by US citizens.

In March 1986, Libya fired missiles at US aircraft in the Gulf of Sirte during US military manoeuvres in the area. The United States responded by attacking Libyan patrol boats and a land-based missile site at Sirte.

On April 15, 1986, US planes bombed targets in Tripoli and Benghazi, including Gaddafi's Tripoli home. Libya said more than 40 people were killed, nearly all civilians, including Gaddafi's 15-month-old adopted daughter.

Washington said the raid was a response to Libyan involvement in a blast at a West Berlin discotheque which killed two Americans.

US sanctions were expanded after the bombing of the disco to include a total ban on direct import and export trade, commercial contracts, and travel-related activities.

After the raid, European states took steps to cut Libya's diplomatic presence. A number of Libyans were expelled.

In late 1988, tensions between the US and Libya rose again with US accusations that Libya was making chemical weapons.

Two Libyan aircraft were shot down over the Mediterranean after an encounter with US military aircraft in January 1989.

By March 1990 West Germany joined the US in saying Libya was making mustard gas at Rabta. The factory burnt down the same month and Col Gaddafi accused both countries and Israel of sabotage.

Libya suffered wide international isolation after a Pan Am Flight 103 from London to New York blew up over Scotland in December 1988, killing all 259 people aboard the jumbo jet and 11 residents of the town of Lockerbie.

The United States and Britain accused Libyans Abdel Basset al-Megrahi and Al-Amin Khalifa Fahima of involvement and in 1992 the Security Council told Libya to surrender the suspects. Libya refused and sanctions were imposed on April 15 of that year.

Libya agreed in 1998 to the two standing trial in the Netherlands under Scottish law.

In 1999 the European Union suspended sanctions against Libya, although the US continued to apply similar measures.

That year, Britain said it was resuming diplomatic relations with Libya after Tripoli agreed to cooperate in police investigations into the 1984 shooting of a British policewoman outside Libya's embassy in London.

In 2001, Megrahi was found guilty of murder while Fahima was acquitted. Megrahi was given a mandatory life sentence.

In February, Col Gaddafi said Libya was innocent and US investigators had manipulated evidence. Washington and London said Col Gaddafi failed to meet conditions to lift UN sanctions.

In 2002, Col Gaddafi's son said Libya would pay compensation to families of the victims even if Megrahi was acquitted on appeal. But judges upheld his murder conviction. Earlier this year Libya, in a letter to the Security Council, accepted responsibility for the Lockerbie bombing, renounced terrorism and agreed to pay compensation to the victims' families and to cooperate in future investigations.

In September, the Security Council voted unanimously to lift the sanctions on Libya but US sanctions remained.

In November this year, the US said it would renew the ban on US citizens visiting Libya for a year but would review it every three months, a signal Washington could ease some sanctions if Tripoli addressed US concerns on terrorism and weapons of mass destruction.

Also this year, a charity headed by the son of Col Gaddafi pledged to compensate victims of the Berlin disco bombing. Germany said it could encourage it to back lifting sanctions.

But a deal with France to compensate families of 170 people killed in the 1989 bombing of UTA flight 772, is yet to be agreed and France warned Libya this month that shedding its international pariah state reputation depended on agreeing to a payout for victims of the bombing of the French airliner.

Libya never acknowledged responsibility for the bombing.