Speaking on BBC radio on Tuesday, Shukri Ghanim also said Tripoli was not guilty of the shooting and killing of a British policewoman during a protest outside the Libyan embassy in London in April 1984.
Libya agreed in August last year to pay 2.7 billion dollars in compensation to the families of the 270 people killed when Pan Am Flight 103 was blown up in the sky over the Scottish town of Lockerbie.
It also wrote a letter to the UN Security Council saying it "accepts responsibility" for Libyan officials involved in the bombing. The council responded by lifting international sanctions against Libya the following month.
"We thought it was easier for us to buy peace and this is why we agreed to compensation", Ghanim told BBC Radio 4's "Today" programme.
"Therefore we said, 'Let us buy peace, let us put the whole case behind us and let us look forward'", he added.
Observers said Ghanim's comments risked upsetting Tripoli's rapprochement with London. A spokesman for British Prime Minister Tony Blair said London would ask Tripoli to clarify the remarks.
"Obviously we will want to clarify what the (Libyan) prime minister said with the Libyan authorities", he said, adding that there was a "disparity" between the comments and Libya's earlier position.
In the Libyan capital, Foreign Minister Abd Al-Rahman Muhammad Shalgham said Libya had accepted "responsibility for the actions and activities of its officials" with regards to the bombing of Pan Am Flight 103.
"We did not say we accepted responsibility for the bombing of
Pan Am", Shalgham added.
Ties between Britain and Libya improved dramatically after Libyan leader Muammar al-Qadhafi announced in December his country had given up its efforts to obtain weapons of mass destruction.
Al-Qadhafi has announced giving
up effort to obtain WMD's
Britain and Libya restored diplomatic relations in 1999, and
Ghanim on Tuesday said he hoped British Prime Minister Tony Blair would go to Tripoli to see al-Qadhafi, and "the sooner the better".
"I am sure that he will be surprised that we are just very open people, very nice people," he said. "He will enjoy his visit."
But he indicated Libya felt no guilt for the shooting of
police constable Yvonne Fletcher, apparently by a gunman inside the Libyan "people's bureau" in London's smart Saint James district.
The incident occurred during a protest by opponents of al-Qadhafi's regime, with witnesses saying the shots clearly came out of a fourth-floor window in the embassy.
"We thought it was easier for us to buy peace and this is why we agreed to compensation. Therefore we said, 'Let us buy peace, let us put the whole case behind us and let us look forward."
Libya's prime minister
Libya agreed in July 1999 to pay compensation to her family, but never turned over the suspected gunman.
In his interview on Tuesday recorded in Tripoli, Ghanim said there was no evidence Libya was to blame for Fletcher's death and that he considered the affair "settled".
Ghanim's interview was aired a fortnight after landmark talks in London between British Foreign Secretary Jack Straw and Shalgam.
Straw said talks during the visit, the first by a Libyan foreign minister in more than 20 years, had covered "enhanced co-operation" on resolving the outstanding issues surrounding Fletcher's murder.
Shalgam said they would work on the issue with "honesty".