The foundation expressed "complete satisfaction" with the deal announced Tuesday under which Libya will compensate victims of the 1986 bombing at the "La Belle" discotheque, which was frequented by US servicemen, in then West Berlin.

But the foundation said: "In the same context we should not however forget that this painful incident does not represent but a part of the major sorrowful picture because as a consequence of this incident air raids were launched on the two cities Tripoli and Benghazi" early on April 16, 1986.

Meanwhile the Libyan Foreign Affairs Ministry stressed that the negotiations on the Berlin disco bombing were "not official" and did not implicate the Libyan state.

The US strikes killed 41 people and wounded 226 others, "who undoubtedly deserve to be properly compensated and honored and those who carried (out) this action be brought to justice," said the foundation, which is chaired by Saif al-Islam, son of Libyan leader Moamar Kadhafi.

The foundation said it "hopes that solving the problem of 'La Belle' be part of the whole solution to that major unfortunate and more painful picture."

Two GIs and a Turkish woman were killed and more than 250 people were wounded in the Berlin attack.

Immediately after the bombing in Berlin, former US president Ronald Reagan accused Libya, which has never accepted blame, and retaliated by ordering airstrikes on its capital.

Earlier Tuesday, Libya's ambassador to Germany, Said Abdulaati, said that Tripoli had agreed to pay a total of 35 million dollars (28.4 million euros) to non-US nationals who were hurt at "La Belle."

The United States welcomed the news that Germany and Libya have reached an agreement on compensating non-US nationals wounded in the bombing but reminded Tripoli that the families of the two American victims should receive compensation as well.

The German government confirmed the news and welcomed a deal that is seen as vital to restoring Libya's international legitimacy.

"Germany favours in agreement with its European partners a new quality in relations between the European Union and Libya," it said in a statement.

"With the agreement that has been reached, nothing more stands in the way of an early visit to Libya by the federal chancellor" Gerhard Schroeder, it said.

However the Foreign Ministry in Tripoli was keen to stress that the Libyan state had agreed nothing.

"There have not been official negotiations between Libya and Germany on this question," the ministry said in a statement.

"These were negotiations between the charitable Kadhafi Foundation and the families of victims," it added.

"Libya, as a state, will not pay damages except under conditions which it has given the German government on this question," it said, without giving any details.

WAR.WIRE