A group of MPs and peers has arrived in Libya confident of eventually securing £600m (€675m) in compensation for the victims of Semtex explosives supplied to the IRA by Colonel Gadaffi’s regime.

The Libyan leader indicated last week that a deal had been struck with the UK to compensate families whose relatives were killed or injured by IRA Semtex bombs in the 1970s and 1980s. A source close to the negotiations said no deal had been struck. “Talks are about to start but we hope $1 billion (€675m) will be paid out.”

The talks aim to settle a long-running legal action in the British courts by lawyers for 147 “Semtex families”. They were given new impetus after the Scottish government agreed two months ago to allow the Libyan convicted of the 1988 Lockerbie bombing to return to Tripoli on compassionate grounds.

Willie Frazer, a victims’ campaigner, said: “The figure mentioned is $1 billion. This equates to the scale of compensation paid by the Libyans to American and French victims of Libyan-funded terrorism.” Two years ago Gadaffi agreed to pay $1.5 billion to the US Lockerbie victims and the three US victims of IRA attacks in the UK.

The UK delegation includes the Democratic Unionist party MPs Jeffrey Donaldson and Nigel Dodds; Andrew MacKinlay, the Labour MP for Thurrock; Lord Bew, the crossbench peer from Northern Ireland; and Lord Brennan, a lawyer.

Donaldson said that the delegation had been well received, having been given a reception by the mayor of Tripoli. A meeting has been arranged with the Libyan minister for Europe. It is not known if Gadaffi will meet the group.

Gadaffi is believed to want a quick settlement, hoping to consign his past as a supplier of arms to terrorists to history. A source said: “This is offering Colonel Gadaffi an opportunity to make a humanitarian gesture on the world stage, hopefully in a few months’ time.”

Frazer said: “We are very hopeful. For us this is not just a case of money. It is a formal recognition of what has happened. Compensation by Libya, which supplied the Provos with tons of weapons, means the IRA will not be able to write themselves up as freedom fighters in the history books.”

Jason McCue, a lawyer for the UK victims, declined to comment. Any settlement is not expected to be finalised for several weeks.

At the time that Libya supplied the IRA with Semtex, Gadaffi described the terrorist group as having a just cause. He was motivated by revenge for the US air force’s use of UK bases in the bombing of Tripoli.

Times Recommends

• Mandela’s tribe threatens President Zuma
• The French empire strikes back
• Wife of cheating governor exacts a political revenge