Italy has already drawn up a plan for a fund that would be "under US supervision and control but with the governance entrusted to people from the Italian banking system," Il Sole 24 Ore said, without citing its sources.

The fund would "receive deposits of the regime of (Moamer) Kadhafi that are emerging and that have been frozen based on UN and EU decisions," the report said, referring to the billions of euros (dollars) in blocked assets.

The interest from the deposits, which would include oil revenue from fields and installations in eastern Libya, would go to the rebels, the report said.

"The US and Italy are apparently the first countries ready to move in this direction," it said, adding that Prime Minister Silvio Berlusconi would discuss the fund at a meeting with US Secretary of State Hillary Clinton on Thursday.

International powers including all the countries taking part in a NATO-led campaign against Kadhafi's regime meet in Rome on Thursday for talks on aiding Libya's opposition and trying to find a diplomatic solution to the conflict.

earlier related report
Two loud blasts as jets overfly Tripoli
Tripoli (AFP) May 4, 2011 - Two loud explosions were heard early Wednesday as jets overflew the Libyan capital Tripoli, days after the regime said Libyan strongman Moamer Kadhafi escaped an air strike that killed one of his sons.

Gunfire rang out following the second strike.

Early on Sunday, government spokesman Mussa Ibrahim said that Seif al-Arab Kadhafi, one of the Libyan leader's sons, and three of his grandchildren were killed in a NATO airstrike that he termed a bid to assassinate the strongman.

An international coalition began carrying out strikes on forces loyal to Kadhafi on March 19, under a United Nations mandate to protect civilians in the country. NATO took command of operations over Libya on March 31.

earlier related report
Italy to press for deadline on Libya campaign
Rome (AFP) May 3, 2011 - Italy said on Tuesday it would press its partners to set a deadline for the NATO-led campaign in Libya, amid a stalemate in the conflict on the ground and doubts about further Western action.

Italy "will try, together with international organisations like NATO and with its allies, to set a deadline," said Foreign Minister Franco Frattini, speaking ahead of a meeting of the International Contact Group on Libya in Rome on Thursday.

Referring to the upcoming meeting, Frattini was quoted by Italy's ANSA news agency as saying that the talks would aim to set out "a roadmap for a ceasefire and for a constitutional assembly of Libyan reconciliation."

The Italian parliament is set to approve a motion on Wednesday calling on the government to set a deadline on Italy's participation in the military campaign and to exclude any future use of ground troops.

A draft of the statement calls for "a definite timeline for the conclusion of targeted action against military installations on Libyan territory, in accordance with international organisations and allied countries."

It also urges the government to "begin immediately a decisive and strong political initiative on the international stage to find a diplomatic solution" and says Italy must exclude any possible use of ground troops in the future.

It rules out "any further tax increases to finance the mission."

The oulines of the non-binding statement were approved at a meeting on Tuesday of Prime Minister Silvio Berlusconi's ruling coalition in a bid to heal a rift sparked by the government's decision to take part in air strikes.

The Northern League, a junior but influential partner of Berlusconi's People of Freedom party, had called for a deadline to be set on Italy's participation in the conflict, as well as a cap on financing for military operations.

Participants at Tuesday's meeting told reporters about the agreement between the Northern League and the People of Freedom which are set to vote on the motion together, ruling out earlier fears of a deeper rift in the government.

Italy offered use of its air bases to third countries and conducted air support operations immediately following a UN Security Council resolution in March that opened the way for international military action against Libya.

On April 25 it announced it would also take part in air strikes, which officials said they had avoided out of concerns over Italy's colonial past.

Libya was an Italian colony between 1911 and World War II and Kadhafi makes frequent mention of the struggle against colonial rule in his speeches.

Berlusconi had built up close ties with Libyan leader Moamer Kadhafi in recent years and Italy was Libya's top trade partner before the outbreak of the conflict.

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