France said on Monday it expected Libya and families of 170 people killed in the 1989 bombing of a French airliner to sign a compensation deal soon, clearing the way for the end of U.N. sanctions against Tripoli.

"The basis of an accord has been found, it remains to be finalized and that is what will be done in the next few hours," Foreign Minister Dominique de Villepin told French RFI radio.

Asked if France, which holds a veto in the U.N. Security Council, would then allow a British draft resolution on the lifting of sanctions against Libya to pass, he replied:

"We have always said we back the principle of lifting sanctions and of course this will lead us to draw the consequences very quickly."

Libyan leader Muammar Gaddafi said on Sunday a deal had been struck to increase compensation for the bombing of an UTA jet over the African state of Niger in 1989.

Britain acted to end U.N. sanctions on Libya when Tripoli agreed last month to pay $2.7 billion to families of 270 people killed in a 1988 bombing of a Pan Am airliner over the Scottish town of Lockerbie.

France threatened to block the move unless Tripoli increased compensation for the UTA bombing.

Though Libya has never admitted responsibility, it has already paid $34 million to France after a Paris court convicted six Libyans in absentia for the killings.

A source familiar with the Libyan position told Reuters on Saturday Tripoli had offered some $300,000 per family on top of the original amount.

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