Britain has written to the United Nations calling for sanctions against Libya to be lifted after the country formally accepted responsibility for the 1988 Lockerbie bombing.
In another letter delivered to the UN Security Council on Friday, Libya agreed to set up a £1.7 billion sterling fund to compensate the families of the victims of the 1988 bombing, in which 270 people died.
Libya also pledged to fight terrorism and agreed to co-operate with any further investigations into the bombing.
Foreign Office minister Denis MacShane said that Libya had met all the requirements of the Security Council to lift sanctions imposed in 1992.
"We have written to the president of the Security Council to make that clear. And our permanent representative to the UN will table a draft Security Council resolution to that effect shortly," Mr MacShane said in a statement.
Mr MacShane said Libya's acceptance of the Lockerbie bombing was of great significance for the international community. "It shows that it is possible to resolve serious security issues through commitment, dialogue and co-operation," he said.
A Scottish court convicted Libyan intelligence agent Abdel Basset Ali Mohmed Al-Megrahi of the bombing in 2001 and sentenced him to life imprisonment. A second Libyan was acquitted.
PA