"We are setting up a meeting with Gaddafi, I can confirm that the prime minister intends to meet him," Foreign Minister Franco Frattini told reporters on Thursday.

Italy is OPEC member Libya's main European trade partner and Italian oil company ENI holds stakes in pipeline, natural gas and oil projects in Libya.

Libya is also a major launching point for thousands of Africans who cross the Mediterranean every year to land on Italian shores as illegal immigrants. With many Italians blaming them for crime, Berlusconi launched some tough measures on Wednesday such as making illegal immigration a jailable offence.

Earlier this month, Libya threatened to suspend cooperation on immigration after Berlusconi appointed Roberto Calderoli who, at the height of a 2006 row over Danish cartoons of the Prophet Mohammed, sported a T-shirt showing an offending cartoon.

Tripoli was also reported to be preparing sanctions against Italy affecting ENI's activities in the North African country. But the two countries patched up after the minister, Roberto Calderoli, offered an apology.

Frattini, a former European Commissioner, said last week he would travel to Libya himself to talk about illegal immigration and Italy's interior minister has promised to speed up an accord with Tripoli from end-2007 on joint patrols in Libyan waters.

Italy, which ruled Libya from 1911 to 1943, has had difficult relations with Gaddafi since he seized power in 1969. But ties warmed up in recent years and Italy is Libya's main trading partner in Europe.