One of the Libyans suspected of involvement in the murder of WPC Yvonne Fletcher has been killed, rebel officials in Tripoli have announced.
Abdulqadir al-Baghdadi, who was an official in the Libyan embassy in London at the time of the 1984 murder, was shot in the head.
British police hope to travel to Libya to investigate the murder of WPC Fletcher, who was shot while on duty outside the embassy in London.
Foreign Secretary William Hague said officers would assess whether the news of al-Baghdadi's death would affect their investigation.
Mr Hague told the BBC: "This is the subject of a Metropolitan Police investigation that is going on and will go on into the future so I don't want to prejudge immediately what has been announced.
"Of course we will want to know a good deal more about what the NTC (National Transitional Council) say has happened in this case and I'm sure the police will want to know and assess themselves whether it affects their investigation in any way."
The Daily Telegraph last week claimed that a report has been drawn up for the Crown Prosecution Service which includes a witness account claiming junior diplomat Abdulmagid Salah Ameri was seen firing a gun on the day of WPC Fletcher's death.
The newspaper reported that al-Baghdadi was named as a co-conspirator in the CPS files, with Matouk Mohammed Matouk.
Earlier Mr Hague told Sky News that officers from the Metropolitan Police could travel to Libya in the course of their investigation once the security situation had improved.
"The NTC have always said to us, including when their chairman was here in London in May, that they would co-operate fully with the British authorities on these subjects and this is one of the priorities for us in future relations with Libya.
"Diplomatically, we will help the Metropolitan Police to conduct investigations, including in Libya, when the security on the ground allows that."
But questions remained about whether any of the suspects involved in the murder could stand trial in the UK.
Mr Hague said: "Libya does have a law that prevents it from extraditing its own citizens to other countries, but of course these are all issues we will have to resolve depending on how the police investigation goes on."
A spokesman for the rebel council in Tripoli said al-Baghdadi's death was probably the result of an "inside vendetta" within the Gaddafi regime.
Earlier, Prime Minister David Cameron chaired a meeting of the National Security Council, which discussed developments on the ground, the humanitarian situation and the unfreezing of Libyan assets.
The meeting also looked ahead to the Libya summit being held on Thursday in Paris, which is being co-chaired by Mr Cameron and French President Nicolas Sarkozy, although officials said the agenda is "still being worked through".
The aim is to agree what else the international community can do "in order to help the Libyans' reach their goal of a secure and peaceful country that is Libyan led", Downing Street said.
Forces loyal to Muammar Gaddafi were given a deadline of Saturday to surrender by NTC leader Mustafa Abdel Jalil.
He has warned that rebel forces are planning to take over the remaining loyalist areas in the coming days, including Gaddafi's home town of Sirte.
Mr Hague said he hoped that Gaddafi loyalists would surrender to prevent further bloodshed.
He told Sky: "They are in a fairly hopeless situation militarily, without prospect of resupply or reinforcement to any significant degree.
"They have been given this chance over the next few days to consider their situation, to bring this to an end, to lay down their arms."
Rebels are also calling for Algeria to hand back Gaddafi's wife Safiya, daughter Aisha and sons Hannibal and Mohammed, who fled there over the weekend.
The new Libyan government, being set up by the NTC, may seek to extradite the relatives and bring them to justice.
However, Algeria's autocratic regime has not yet recognised the new Libyan administration and has successfully snuffed out anti-government protests within its own borders.
Almost £1 billion of Libyan currency held in the UK will be released to the country's central bank after the UN Sanctions Committee approved the measure.
Some 1.86 billion Libyan Dinar (£950 million) of newly printed banknotes were held in the UK under sanctions imposed on the Gaddafi regime.
Mr Hague said: "This represents another major step forward in getting necessary assistance to the Libyan people, building on the remarkable progress in recent days.
"These banknotes, which were frozen in the UK under UN sanctions, will help address urgent humanitarian needs, instil confidence in the banking sector, pay salaries of key public sector workers and free up liquidity in the economy."