Libya has proposed a "comprehensive" new deal to the United States aimed at resolving a string of cases to compensate terrorism victims, a senior U.S. official said on Wednesday.

The official, who requested anonymity because the issue is so sensitive, told Reuters that senior Libyan officials presented the deal during talks in London on Tuesday and Wednesday with U.S. Assistant Secretary of State David Welch.

The United States restored diplomatic ties with Libya almost two years ago after Tripoli gave up its weapons of mass destruction program, but the terrorism compensation cases have soured ties between the former foes.

"The purpose of it is to deal with the claims and to keep the path of normalization (of ties) going in a way that meets the interests of all," the official said of Libya's offer.

He declined to provide details of the deal or say how much money could be offered to the families of terrorism victims, such as those from the 1988 bombing of a Pan Am flight over Lockerbie, Scotland.

"Basically they (the Libyans) have suggested a way to expedite the resolution of these cases through a comprehensive settlement agreement. The reason it is interesting is because it is comprehensive and offers the promise of being more expeditious if it works," said the official.

"It is a complex proposal and will take some time to look at," he said.

Libya's new suggestions were partly driven by Tripoli's concern over U.S. legislation this year that expanded existing laws to enable terrorism victims to collect damages from governments like Libya by having their assets frozen.

The pending legal issues include cases involving the bombing of Pan Am Flight 103 over Lockerbie, Scotland, and the 1986 bombing of a German disco. Americans died in both cases.

In addition, a U.S. judge in January ordered Libya to pay billions of dollars in damages to relatives of Americans killed in a 1989 suitcase bombing of a French airliner over Niger.

"The administration therefore is exploring this possibility with Libyan representatives to see whether it could help U.S. victims so they can get their fair compensation in the shortest time possible and with greater certainty," the U.S. official said.

Some of the U.S. families involved in the cases have repeatedly accused the Bush administration of not doing enough to push the Libyan government to settle the issue and of caving to the lure of closer diplomatic ties.

But Libya's ambassador to the United States, Ali Aujali, told Reuters last month that ties were increasingly strained with the United States and Tripoli felt it was not being rewarded for giving up its weapons of mass destruction program in 2003.

U.S. Secretary of State Condoleezza Rice has held back on visiting Libya because of the compensation cases and other human rights concerns.

She has said she still hopes to visit Tripoli before the end of the Bush administration's term in January 2009, but has given no date for a possible trip.