According to Rami Cahaloun, head of the Association of Libyan Jews, the delegation, which includes 15-20 Libyan Israelis, might meet Libyan Leader Muammar al-Qadhafi in the next few weeks.
The news follows reports earlier this week of a recent secret visit by an unnamed Libyan official to Israel.
"I know for a fact that someone is in Israel now to prepare something diplomatic," an Israeli-Libyan Jewish leader was quoted as saying by The Jerusalem Post on 3 March.
There is speculation that another important goal of the Tripoli visit may be to prepare for the possible normalisation of relations between Libya and Israel.
Libya may also be seeking to impress the United States by appearing to soften its position on Israel.
However, it is not clear if the Libyan government will insist on linking the issue of compensation for Israelis of Libyan origin with the resolution of the Palestinian problem.
In 1948, Israel confiscated more than 90% of Palestinian property, including hundreds of thousands of hectares and tens of thousands of buildings which were later handed over to the Jewish Agency.
"I know for a fact that someone [a Libyan official] is in Israel now to prepare something diplomatic"
Israeli-Libyan Jewish leader quoted in The Jerusalam Post
The organisation has since been using the land and the buildings for the exclusive benefit of Jews as non-Jews are barred from benefiting from "state-land".
Israel also refuses to allow millions of Palestinian refugees expelled from their homes and villages in 1948, often at gunpoint, to return, claiming that their repatriation would undermine the Jewish identity of Israel.
Libyan officials were unavailable for comment.