The 1988 bombing killed 270 people

The deal to set up a $2.7bn (£1.7bn) fund was struck with Libyan officials after negotiations in London.

Once the money is in place, Libya is expected to write to the United Nations saying it takes responsibility for the attack on Pan Am flight 103.

The American State Department has invited families of victims to attend a meeting on Friday.

Assistant Secretary of State William Burns has cut short a trip to the Middle East to brief the relatives.

It is expected that the Libyan Government will send a letter to the United Nations Security Council the same day, accepting responsibility for the 1988 bombing in which 270 people were killed.

Draft resolution

Under the deal Libya was expected to start transferring the compensation money - up to $10m for every victim - into a Swiss bank account immediately.

The US is then expected to write to the UN Security Council to say it believes Libya has met the conditions for lifting of sanctions, which were suspended in 1999.

Britain would circulate a draft resolution calling for that step to be taken.

Mixed reaction from relatives Analysis: Libya's last hurdle

Lawyer Mark Zaid, who represents about 50 of the Lockerbie families, has been involved in the negotiations with the Libyan government.

He told BBC Scotland that the potential $10m pay-out was conditional on three events.

"The lifting of UN sanctions will result in a $4m pay-out," he explained.

"The lifting of US sanctions will result in a $4m pay-out and then if Libya is removed from the US State Department's state sponsored list of terrorists $2m will be paid."

David Ben-Aryeah, a spokesman for UK relatives, said there were "serious misgivings" about whether the two later instalments would ever be paid.

"The UK relatives, who have honoured me with their trust and friendship, have had two basic demands from the very first days - truth and justice," he said.

Independent inquiry

"We have had a form of justice but we have not had anything approaching the truth.

"They asked the foreign secretary for a full and independent inquiry. He rejected that request."

Mr Zaid said he hoped that the families would be told some of the language being used by Libya in its proposed acceptance of responsibility at the briefing on Friday.

If he is just going to blame it on an individual citizen of Libya and say that the government has nothing to do with it then that is not acceptable at all George Williams

"It would not surprise me if there are families who are not satisfied with the language," he said.

"The fact of the matter is that this is a financial deal for Libya. All Libya cares about is to extricate itself from these sanctions and re-enter the international and particularly the US market.

"The statement of responsibility will be diplomatic legalese. That's the way the process works.

"It will be a statement, most likely, that can be interpreted one way or the other depending on who the reader is."

He predicted that it would not go far enough for some families, who may decide to go forward with civil litigation.

Right to sue

George Williams, one of the leaders of the group representing the American families, said the language contained in the letter to the UN would be crucial.

"If he is just going to blame it on an individual citizen of Libya and say that the government has nothing to do with it then that is not acceptable at all," he said.

"I would just as soon have the UN sanctions re-imposed and continue until Colonel Gaddafi curls up in a corner and dies."

However, he said the compensation deal was "pretty much done".

"The only thing that would satisfy us more would be to have Gaddafi's head delivered on a platter over to the US and let us all walk by it and spit on it," he said.