The BBC's Andrew Cassell: Sense of momentum is building towards a resolution

Mr Annan told reporters he was hoping to conclude a deal on the transfer of two suspects in the Lockerbie bombing case in return for the suspension of sanctions.

Mr Annan, who is now in Tunisia, has requested special permission from a UN sanctions committee to break the UN embargo on flights to Libya .

The BBC's Barbara Plett: "Solutions to problems holding up the extradition"

On Wednesday the UN Secretary-General said his officials had made good progress on negotiating the extradition of two Libyans accused of planting the bomb on Pan Am flight 103 in 1988 which killed 270 people.

Mr Annan has asked permission to fly to Libya

Diplomats said Mr Annan wanted to be assured that Colonel Gaddafi would agree to hand over the suspects before he made the trip.

Correspondents say Mr Annan is not empowered to negotiate any new terms beyond how the two will be transported to the Netherlands for trial.

BBC's Nick Pelham: Deal has already been reached

Libya has agreed in principle that the two men, Abdel Basset al-Megrahi and Al-Amin Khalifah Fhimah, could be tried in the Netherlands before Scottish judges.

But a key sticking point remains over where the two, if found guilty, would serve their sentences.

Libya has said it is not prepared for them to be jailed in Scotland.

But Britain announced on Wednesday it was prepared to make special arrangements for the prisoners and that there would be an international observer regime to ensure they were treated properly.

Diplomats say once the two suspects have been handed over, Libya would see an immediate suspension of sanctions the UN imposed in 1992.

The sanctions, tightened in 1993, include a ban on air travel, an arms embargo, a freeze on some Libyan assets abroad and a ban on certain types of equipment used in oil terminals and refineries.

UN legal counsel Hans Corell has spent the last few weeks negotiating detailed arrangements for a possible extradition of the suspects and fielding queries about trial and detention plans from Libyan lawyers.

The Dutch authorities have set aside a former air force base for the trial at Camp Zeist near Utrecht.