Colonel Gaddafi is to pay as much as £2billion in compensation for IRA terrorism carried out with explosives supplied by Libya, it emerged today.

The agreement follows nine months of talks in Tripoli involving representatives of families and British officials.

It will deliver payments to the families of victims killed in a series of republican bombings using Semtex shipped from Libya in the 1980s.

Among attacks carried out with the imported plastic explosive were the Harrods bombing of 1983, which killed six amid Christmas shopping crowds, and the Enniskillen atrocity of 1987 that left 11 dead during a Remembrance Day service.

It was also used by the Real IRA splinter group in the Omagh bombing in August 1998, killing 29 and injuring 220.

Yesterday, after nine months of negotiations between officials in London and Tripoli, the dictator made an unexpected concession: he announced that he would shell out up to 3.5 billion Euros in reparations to victims of IRA terrorism. The deviation from his previous response accompanies renewed bilateral relations with Switzerland, against whom Qaddafi had declared a holy war in February. Qaddafi has both released Swiss businessman, Max Goeldi -- detained in Libya for defying a travel ban put into effect after Switzerland authorities arrested Qaddafi's son on charges of assault -- and established an arbitration tribunal to settle the diplomatic dispute with Libya's former adversary.

These recent developments are productive, but they doubtfully signify that Qaddafi -- the principal financier of a laundry list of horrific terrorist attacks and rebel movements -- will now make a habit of letting reconciliation or reform govern his agenda.