The UTA bombing claimed 170 lives

No details have been disclosed, but the agreement has opened the way for United Nations sanctions on Tripoli to be finally lifted.

The deal follows French protests that an earlier settlement had been dwarfed by the $2.7bn Libya agreed to pay in connection with the 1988 Lockerbie bombing.

Paris' objections had led to the postponement of a Security Council vote on ending sanctions against Libya.

Charity

Foreign Minister Dominique de Villepin made clear that his government's position had changed as a result of the settlement.

It has been a long fight, and today we can see a solution that allows a large number of the victims to bring it to an end Relatives' lawyer

"France naturally no longer has any objection to the UN Security Council voting as soon as possible on the lifting of sanctions against Libya," he told reporters in Paris on Thursday.

"I have just informed my American and British counterparts Colin Powell and Jack Straw," Mr de Villepin added.

A lawyer for the families said: "It has been a long fight, and today we can see a solution that allows a large number of the victims to bring it to an end."

UTA flight 772 was blown up over Niger in September 1989, killing all 170 people on board.

On 1 September, France and Libya announced that they were finalising a revised compensation deal.

Families would receive funds from a charity headed by a son of Libyan leader Muammar Gaddafi - not from the Libyan state.

No blame

The Gaddafi International Association for Charitable Organizations said the offer entailed no admission of guilt by any Libyan party.

Tripoli has never accepted responsibility for the bombing - despite the conviction of six Libyan officials tried in absentia by a French court in 1999.

LIBYA SANCTIONS First imposed in 1992 Bans on flights, arms sales, and oil exports Freeze on Libyan funds Reduce Libyan diplomatic representation Suspended, but not lifted, in 1999 Lifting sanctions

Libya refused to extradite the six, who include Colonel Gaddafi's brother-in-law, and has always maintained their innocence.

However, it agreed to pay out $33m demanded by the court in compensation.

After the $2.7bn Lockerbie deal was announced last month, French demands for a more "equitable" settlement over the UTA bombing led to tensions within the Security Council.

Britain and the United States said that, in settling the Lockerbie issue, Libya had met its requirements for sanctions to be lifted.

But France threatened to veto a UK-sponsored resolution ending them permanently.

The sanctions were suspended in 1999 - after two Libyans sought in the bombing were handed over for trial.

A vote on the resolution is now expected on Friday.