Italian Prime Minister Silvio Berlusconi visited Libyan leader Muammar Gaddafi today smooth relations between the Mediterranean neighbours after a diplomatic spat last month.

Mr Berlusconi's relations with Tripoli saw a rocky start after his April re-election when he appointed a minister who, at the height of a 2006 row over Danish cartoons of the Prophet Mohammad, sported a T-shirt showing an offending cartoon.

Libya tried to block the appointment of Roberto Calderoli and threatened to suspend cooperation on immigration. Tripoli was also reported to be preparing sanctions against Italy affecting its oil interests in the North African country.

The two countries quickly patched up after Mr Calderoli offered an apology.

Mr Berlusconi held talks with Mr Gaddafi in his home town of Sirte, 500 km east of the capital, in the Italian leader's first visit outside the European Union since taking office.

"(Mr) Berlusconi... spoke of the solid frienship and relations that connect him with Libyan leader (Mr) Gaddafi... and reaffirmed the concern of his country to strengthen ties with Libya," Libyan state television reported.

They discussed ways to deal with the thousands of migrants fleeing poverty who cross the Mediterranean from Libya every year to land on Italian shores, many risking their lives in small, overcrowded boats.

Mr Gaddafi repeated his opposition to a planned union of Mediterranean states which Paris hopes to unveil on July 13, saying the plan "divides Africans and Arabs into two parties".

"The Italian premier said... the countries would work together to achieve this (mr Gaddafi's) vision," Libyan TV said.

Italy, which ruled Libya from 1911 to 1943, has had difficult relations with Mr Gaddafi since he seized power in 1969. But ties warmed up in recent years and Italy is Libya's main trading partner in Europe.

Italian oil major ENI holds stakes in pipeline, gas and oil projects in Libya. Mr Berlusconi told Mr Gaddafi that Italian firms were keen to take part in big infrastructure projects in Libya, according to a statement from Mr Berlusconi's office.