The deal was struck following a private telephone conversation between Libyan leader Muammar Qadhafi and French President Jacques Chirac, it has emerged.

During a live television broadcast in Libya, Qadhafi said: "We can say that the UTA affair and the Lockerbie affair are now behind us and that we are turning a page with France and the United States.

"The money is of little importance to us, we have our dignity."

The Libyan team negotiating with the relatives in Tripoli is headed by Qadhafi's son, Said al-Islam Qadhafi, chief of the charitable Qadhafi Foundation.

A lawyer advising Libya said a deal was hammered out on Sunday and the full terms will be revealed on Monday.

London-based lawyer Said Djebbar also worked with Libya over the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland. Earlier this month Tripoli agreed to pay out $2.7 billion in compensation to the families of 270 killed.

There was no immediate confirmation of a deal from either French authorities or relatives of the victims.

Some 170 people were killed in the 1989 bombing of the UTA airliner over Niger.


"The money is of little importance to us, we have our dignity."

Colonel Muammar Qadhafi

France's Foreign Ministry said it could not immediately confirm
the deal. However, it said President Jacques Chirac spoke to Libyan leader Muammar Qadhafi on Sunday.
   
France has been hoping a deal could be struck to avoid a
confrontation at the United Nations Security Council, where it
has threatened to block a British resolution calling for an end
to UN sanctions on Libya after the North African state
accepted responsibility for the Lockerbie bombing.

Libya initially termed the French demand "blackmail", but later suggested that a compromise offer for the UTA families was possible.

In his address on Sunday, Qadhafi said that a number of foreign government officials had sought to influence him over a settlement with France, including Tunisian President Zain al-Abidin Bin Ali and Lebanese Prime Minister Rafiq Hariri.