A senior UK government official observed on Wednesday that Blair will be the first British PM to visit Libya since Winston Churchill during the Second World War.
"We believe that al-Qadhafi has made important strategic decisions on weapons of mass destruction and on Lockerbie and we want to demonstrate our support for those decisions," the official said.
Blair's visit will coincide with the probable signing of a major gas deal for the Anglo-Dutch oil company, Shell.
"A number of British companies are interested in Libya. It is possible that Shell will be able to find an agreement with Libya in the days ahead."
Shell is after the gas exploration rights off the North African country's coast. But several other UK companies were likely to reap the benefits of improved relations.
"It's quite odd timing to go from a service which commemorates the victims of the biggest terrorist attack on Europe since Lockerbie, to go straight from there to Libya"
Conservative party leader
British Aerospace and defence giant BAE Systems is "in advanced negotiations with Libya on civil aviation," the official added.
Returning to the western fold
The PM's visit follows a thawing of relations between Britain and Libya after Tripoli renounced its pursuit of weapons of mass destruction in December.
Libya is considered a highly attractive country for the world's oil giants because of its low cost of recovery, the quality of its oil and its proximity to European markets.
It has total proven oil reserves of 36 billion barrels, but could have much more because only 25% of the country's territory is covered by exploration and production agreements.
Blair's Conservative opponents however condemned the visit, saying it was inappropriate for the PM to give his condolences in Madrid and then travel to Tripoli.
"It's quite odd timing to go from a service which commemorates the victims of the biggest terrorist attack on Europe since Lockerbie, to go straight from there to Libya," Conservative leader Michael Howard told BBC Radio.
But Jim Swire, a spokesman for some of the families of the Lockerbie victims, welcomed the moves to reintegrate Libya into the international community, culminating with a Blair visit.