Libya has promised about £7m compensation to each of the families of the 270 victims of the Lockerbie bombing, the US Government has been told.
The reported compensation would amount to £1.8bn - the largest such package of its kind.
Negotiations between the Libyan government and lawyers representing the families have been carried out in secret without US government participation.
Compensation for the 259 people killed aboard the the Pan Am flight and 11 in Lockerbie, Scotland, who were hit by falling debris, has been among several demands of the UN Security Council in exchange for lifting UN sanctions against Libya.
Last year, a Scottish court convicted a Libyan intelligence agent of murder for smuggling an explosive aboard the plane on December 21, 1988.
A senior US official said the administration has been told that Libya agreed to pay the compensation piecemeal. Release of instalments would be tied to progress toward lifting the sanctions, in effect since April 15, 1992, and the lifting of separate sanctions imposed by the US.
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