"We regret and deplore the trouble and inconvenience caused to those Libyan citizens. We hope that this move will not be repeated in the future."

Economic ties

Libya said that the EU's ending of the blacklist was a defeat for Switzerland, which instigated the list.

However, Mussa Kussa, Libya's foreign minister, told the AFP news agency that the visa decision had not resolved the diplomatic crisis with Switzerland.

"We demand international arbitration and we will accept any outcome, positive or negative," he said.

The EU's announcement comes after diplomatic moves to end the standoff and ease pressure on economic ties between the European grouping and Libya, an oil exporter.

Switzerland had drawn up the blacklist, which included Muammar Gaddafi, the Libyan leader, and members of his family prompting Libya to stop issuing visas to citizens of the Schengen zone, of which Switzerland is a member.

The terms of the Schengen agreement state that any person blacklisted in a Schengen area nation must be refused entry in the other countries of the pact.

Therefore, the Libyans could not enter any of the Schengen zone nations, which includes 22 EU countries, as well as Switzerland, Iceland and Norway.

Ongoing dispute

Relations between Libya and Switzerland have been strained since July 2008 when Gaddafi's son Hannibal and his wife were arrested and briefly held in Geneva after two domestic workers complained he had mistreated them.

The row deepened when Libya swiftly detained and confiscated the passports of two Swiss businessmen, Rashid Hamdani and Max Goeldi.

Both men were convicted of overstaying their visas and of engaging in illegal business activities.

Hamdani's conviction was overturned in January, while Goeldi surrendered to authorities and is now serving a reduced jail term of four months.

In February, Gaddafi urged jihad against Switzerlandand put a trade embargo on the country this month.