The issue has strained Libyan-Saudi relations
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New Saudi King Abdullah has pardoned two Libyans accused of plotting to murder him, an official statement says.
Riyadh expelled Tripoli's ambassador over the case in December, but Tripoli has strongly denied the allegations.
King Abdullah "hoped that the move would be a constructive step toward closing the ranks of the Arab nation", the Saudi information minister said.
He also pardoned a number of political activists including three intellectuals who were serving long prison sentences.
The three men - the poet Ali al-Demaini, and academics Abdullah al-Hamed and Matruk al-Faleh - were sentenced to up to nine years in jail earlier this year for calling on the country's absolute rulers to move towards a constitutional monarchy.
Saudi liberal writer Turki Al Hamad, whose books have been banned by the Saudi authorities, told the BBC the move was a significant step towards political reforms in the Kingdom.
US concerns
Abdullah was proclaimed king last week following the death of his half-brother King Fahd after a long illness.
Saudi Arabia is said to be holding 13 suspects, including Libyan and Saudi citizens, over the alleged 2003 plot, reports of which first emerged in a US court case.
Washington has said that Libya has yet to clear up US concerns about the alleged plot.
It says the issue is an obstacle to dropping Libya from its list of state sponsors of terrorism.
The alleged plot is said to have involved a prominent American Muslim activist who was jailed in the US for 23 years for breaking a US embargo on Libya.
Abdurahman Alamoudi claimed to have contacted - on behalf of the Libyan government - a group of Saudi dissidents in London plotting to assassinate Abdullah when he was crown prince.