Libya, the United States and Britain have signed off on a deal under which Tripoli would accept responsibility for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, diplomats said on Tuesday.

"There is now sign-off from all three governments. All that is left are the practical steps," said a diplomat who spoke on condition of anonymity. He stressed the deal was contingent on Libya actually taking responsibility and paying compensation to families of the 270 people who died in the bombing.

The deal could lead to a Security Council vote ending U.N. sanctions on Libya early next week, provided that Libya carries out its commitments under the deal, council diplomats said.

The sanctions, which were imposed on Tripoli after the midair bombing that killed all 259 people aboard a Boeing jumbo jet and 11 on the ground, were suspended in 1999 after Libya turned over two Libyan suspects for trial.

To have the U.N. sanctions permanently lifted, Libya must pay compensation to the families of the victims, take responsibility for the attack, renounce terrorism and agree to cooperate in further investigations.

Word the three nations had signed off on the proposed deal came a day after U.S., British and Libyan officials held a fresh round of what Britain called "constructive" talks in London on settlement terms.

'EVERYONE ON BOARD'

Monday's meeting in London was the latest in a series of three-way talks called to evaluate Libya's progress in meeting the conditions for lifting the sanctions. These talks "confirmed everyone was on board," a diplomat said.

The U.N. Security Council imposed an air and arms embargo and a ban on some oil equipment on Libya in 1992 and 1993 to pressure Tripoli to hand over two Libyan suspects for trial.

The sanctions were suspended when Libya turned them over in April 1999. Intelligence agent Abdel Basset al-Megrahi was subsequently convicted while the second suspect was acquitted.

Libya, backed by other Arab nations, now wants the sanctions formally lifted while the international community wants Tripoli to take responsibility for the atrocity.

In separate negotiations, lawyers for the families last week met Libyan officials and representatives for the Bank for International Settlements in Paris to discuss arrangements for an escrow account to hold $2.7 billion, or up to $10 million per victim, that Libya has agreed to pay in compensation.

The lawyers told their clients they had scheduled another meeting for Wednesday in Europe at which they hoped to sign the escrow agreement although a source familiar with the talks said there might be a technical hitch because the BIS wanted further clarifications on exactly how the account would work.

Under a scenario which all three governments have now agreed to, Libya would then send the Security Council a statement, worked out in advance, formally accepting responsibility for the bombing.

The council would then proceed to a vote on lifting the sanctions, probably early next week, diplomats said.

The Wall Street Journal said in an editorial on Tuesday a plan had already been worked out for Security Council action under that Britain would introduce a resolution to end the sanctions and the United States would abstain from voting.

U.S. and British officials had no comment on that report and the State Department declined comment on whether the three governments had reached any agreement.

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