A FORMER Labour defence minister is one of a number of government insiders helping British business unlock the multi-billion pound opportunities afforded by the thawing of diplomatic relations with Libya.

Adam Ingram, who stood down as armed forces minister in 2007, receives up to £25,000 a year from Argus Libya UK LLP, described as a firm that "sniffs out" commercial opportunities in the North African country.

A host of former UK government officials, British companies and at least one member of the Royal Family are also behind moves to pursue commercial opportunities with the former pariah state.

Megrahi's release is likely to be a key turning point in Libya's relationship with the UK. The two countries began to travel down the road of economic co-operation in 2004, when former Prime Minister Tony Blair met Libyan leader Colonel Gaddafi in a Bedouin tent. This was followed by the lifting of EU and UN sanctions against Libya.

At the same time, BP, a company with impeccable New Labour links, signed a £900m gas exploration deal that gave the firm the right to drill 17 wells in the offshore Gulf of Sirte basin and the onshore Ghadames basin. Co-operation documents have since been signed in areas including science, defence, visas and health.

Megrahi's release, according to one senior government insider, will now give UK companies a "seat at the table" as Libya opens up its financial, defence and energy sectors.

Libya's crumbling infrastructure, which followed years of international sanctions, will also provide commercial opportunities for UK businesses. Industry insiders say the biggest wins will be in oil and gas.

With Megrahi released, the bureaucratic delays that have impeded the implementation of the BP deal may now disappear.

The "co-operation" deal between Libya's National Oil Corporation and the BG Group, a gas provider, may also move into overdrive. In addition, Gaddafi's ageing defence equipment will present opportunities for UK companies, particularly BAE Systems, the British defence giant once described by the late Robin Cook as having "the key to the garden door at Number 10".

MBDA Missile Systems, partly owned by BAE, is said to have finalised a contract to supply Libya with anti-tank missiles. Guy Griffiths, the former chief operating officer of MBDA, accompanied Tony Blair on his second trip to Libya in 2007.

A long list of establishment figures in the world of politics, business and government is also behind moves to normalise relations between both countries. The Defence Export Services Organisation, which deals with arms exports at the Ministry of Defence, opened an office in Libya in 2006.

The Libyan British Business Council, a group whose motto is "building bridges with Libya", advertises its services as making introductions to "high-level" decision-makers, government officials and potential partners.

The LBBC's chairman, Lord Trefgarne, was Mrs Thatcher's former defence procurement minister, while the group's director general, Robin Lamb, was a one-time Foreign Office diplomat in Tripoli. Oliver Miles, the LBBC's deputy chairman, is the UK's former ambassador to Libya, while board member Sir Richard Dalton is a former British ambassador to Iran.

The group's membership list also reads like a who's who of British business, including BG International, British American Tobacco, Barclays Bank, Wood Group and HSBC.

A LBBC-led delegation to Tripoli in May focused on investment opportunities in Libya's financial institutions, while in June Prince Andrew co-hosted an event at St James' Palace in London with the chairman of the Libya Africa Investment Portfolio.

Next month, the group stages an event to discuss the multi-million pound water and desalination contracts the Libyan government is expected to hand out.