Malta this evening welcomed a Swiss government statement that it is prepared to lift its blacklist of Libyan travellers coming into the Schengen area.

"Malta is satisfied that the voice of reason is leading to positive results," Home Affairs Minister Carm Mifsud Bonnici said, adding that he hoped all pending issues would now be resolved.

The Swiss blacklist of 188 senior Libyan officials, applicable to all Schengen area countries, had led to retaliation by Libya, which stopped all visas issued to travellers from Schengen member states, including Malta.

Malta had been among countries which had criticised the Swiss decision, saying Schengen rules had been wrongly applied for political reasons. Foreign Minister Tonio Borg on Monday warned that unless the issue was resolved by April 5, Malta would bypass the Schengen agreement by issuing limited territory visas to Libyan visitors, valid only between countries which agreed with such an arrangement. Italy and Spain had appeared to back the proposal.

Switzerland made its offer this evening within mediation efforts by the European Union.

"The government is prepared, within the framework of the European Union mediation, to lift the ban on certain categories of Libyan citizens," the Swiss government said in a statement. "It expects Libya to lift its travel ban for citizens from the Schengen area."

Swiss government spokesman Andre Simonazzi said the statement encompassed all the categories on the Swiss blacklist, but did not clarify whether Switzerland would only lift its travel ban if Libya took similar measures.

"It is up to you to interpret the statement," he said.

Libya's dispute with Switzerland began in July 2008 when police in Geneva arrested Libyan leader Muammar Gaddafi's son Hannibal on charges, later dropped, of mistreating two domestic employees.

Gaddafi's son was released shortly after his arrest, but Libya cut oil supplies to Switzerland, withdrew billions of dollars from Swiss bank accounts and arrested two Swiss businessmen working in the North African country.

One businessman has been released but the other, Goeldi, is serving a four-month prison sentence.

"Switzerland's goal remains Max Goeldi's release. In order to achieve this, the government is prepared to continue negotiations on the basis of proposals by the two European mediators," the Swiss government said.

Libya says the Geneva arrest and the case of the two businessmen are not linked.