Italian Prime Minister Silvio Berlusconi met Libyan leader Muammar Gaddafi yesterday on the first visit to Libya by a Western leader since Tripoli vowed to abandon its banned weapons programme.

The Italian leader said after a brief visit to the North African country he was taking away proposals to speed up the normalisation of ties between old foes Tripoli and Washington.

"I'm carrying with me proposals from Gaddafi for (President George) Bush related to improving ties between the United States and Libya," Mr Berlusconi told a news conference after his talks with Col Gaddafi during a visit that lasted only a few hours.

Earlier, Libyan and US officials said in London the United States had re-established a first diplomatic presence in Libya after decades of mutual hostility.

The move follows Gaddafi's decision in December to renounce efforts to acquire weapons of mass destruction and cooperate in dismantling nuclear and other banned arms programmes.

Mr Berlusconi did not elaborate on Col Gaddafi's proposals on further mending ties with Washington.

Libyan television showed the two men sitting in a luxurious tent in Col Gaddafi's home town of Sirte.

"Italy and Libya will work together to combat terrorism and illegal immigration," Mr Berlusconi said. He said he had offered to allow more Libyans to study in Italy or to come for medical treatment, and to help the country develop tourism as a token to compensate colonial damages.

Libya wants Rome to compensate it for damages from land mines left behind by occupying forces and the death of Libyans during deportation to Italy by their 1911-1943 colonial rulers. Rome is Libya's main European trading partner. Tripoli provides Italy with some 25 per cent of its oil needs. Mr Berlusconi last visited Libya in 2002.