LIBYAN rebels have called on the UK to hand over £700m worth of currency printed in the North-East but seized before it could be delivered to Colonel Gaddafi.

Anti-Gaddafi forces want the UK Government to release 1.4bn dinars printed in Gateshead to avoid a “catastrophic” financial collapse.

The National Transitional Council (NTC), which is leading the fight to overthrow Gaddafi, has warned the stability of liberated Libya is being threatened by a shortage of money.

In an open letter, Dr Ali Tarhuni, the NTC’s Minister for Finance and Oil, in Benghazi, said: “At present, our money supply is almost finished.

“It goes without saying that the consequences of running out of ready money are potentially catastrophic.

“We feel sure that no one other than Gaddafi would wish this upon us.”

According to the NTC, the easiest short-term solution would be for the Government to hand over the currency, believed to be held at a secret North-East location.

He said: “We are deeply grateful that London has impounded this money, which was originally intended for the Tripoli regime.

“We would now ask the UK to exert every effort to take the next step and transfer this physical cash to the NTC to enable us to keep our economy afloat and pay our people.”

Dr Tarhuni acknowledged that there were legal issues relating to the release of the dinars, printed by British company De La Rue, but he said he hoped the UK could give the issue its urgent attention.

Foreign Secretary and Richmond MP, William Hague, has been urged to intervene by supporters of the NTC.

MPs due to speak at Prime Minister’s questions today have also been asked to highlight the issue.

The call for the release of the money has been backed by Benghazi-born Dr Salem Burwaiss, who now lives in Bishop Auckland.

Dr Burwaiss’ brother, Omran, is a solicitor and senior advisor to the NTC.

The doctor, who was last night attempting to raise the issue with Helen Goodman MP, said: “This money would help a great deal.

“The consequences are unthinkable if people are stopped from fighting because of a lack of money. The crisis in Libya will last longer and people will suffer more.”

De La Rue employs 180 people at its factory on the Team Valley Trading Estate, Gateshead.

It is not known if Gaddafi paid for the currency before it was seized, however, it is thought De La Rue demands payment in advance from politically unstable regimes.

The Foreign and Commonwealth Office said it was aware of the NTC’s concerns and had been pushing the international community to help resolve the financial situation.

A spokeswoman said significant funds were pledged to the NTC during the recent meeting of the Libyan Contact Group.

She said: “There have been some technical issues, but we expect these will soon be overcome and substantial donations and loans will begin to reach the people who need it.

“Regarding the unfreezing of assets, there are a range of complicated legal issues at play and the situation in each country is different. We are considering what would be possible in a British context.”

The open letter was sent to The Northern Echo after it highlighted the seizure of the money in March.