Way cleared for deal with Libya over Lockerbie

France lifted its threat yesterday to veto the ending of sanctions on Libya after Tripoli agreed to pay broadly similar compensation to victims of the 1988 Lockerbie disaster and relatives of those killed the following year by an explosion on a French airliner.

The deal, details of which have still to be finalised, should lead to a unanimous vote in the United Nations Security Council today to end Libyan sanctions and release the $2.7bn compensation promised by Tripoli to families of the 270 Lockerbie victims.

There is substantial circumstantial evidence, but no proof, linking Libya to the destruction of both Pan Am flight 103 over Lockerbie and the explosion on board a UTA DC-10 over Niger in 1989.

Britain and the United States agreed last month to push for the lifting of UN economic and political sanctions on Libya after Colonel Muammar Gaddafi agreed to pay compensation of up to $10m to the families of each Lockerbie victim. France said similar compensation should be paid to the relatives of the 170 people who died in the UTA explosion, 54 of whom were French.

A French court set compensation for the UTA victims at $35m in 1999 after finding Col Gaddafi's brother-in-law and five other Libyans guilty in absentia of planning the attack on the aircraft. Paris objected that this gave the UTA families only $194,000 each, less than one fiftieth of the sum offered to the Lockerbie families.

A deal between Libya and France appeared to have been agreed last week but was held up at the last moment. Paris made clear that it could not support a British motion in the UN calling for the the lifting of Libyan sanctions - originally scheduled for a vote on Tuesday - until the negotiations were completed. Dominique de Villepin, the French Foreign Minister, asked Jack Straw, the Foreign Secretary, to postpone the vote until today.

A pressure group for families of the UTA victims announced in Paris yesterday that an outline deal had been reached with Libya to set up a "charitable fund", which would compensate relatives. No figure was given. Francis Szpiner, a lawyer for one of the groups supporting the victims, said that details still had to be completed. "Today we can foresee a solution that will allow families of victims to end their grieving," he said.

M. de Villepin then announced that France would support the British resolution in the Security Council. "France does not oppose that the Security Council vote for the lifting of sanctions as quickly as possible," he said. "We hope that a new page will therefore be turned in ties between France and Libya."

The Libyan-French deal is believed to involve establishing a foundation to assist the UTA victims, which will be run by the Gaddafi International Association for Charitable Organisations, a charity headed by one of the sons of the Libyan leader.