Saif al-Islam Gaddafi (right) welcomed the Lockerbie bomber to Tripoli
Colonel Gaddafi's son has said Libya will resist demands from the families of IRA victims for compensation.
Saif al-Islam Gaddafi said any claims for compensation based on Libya's supply of explosives to the IRA would be a matter for the courts.
He told Sky News: "They have their lawyers, we have our lawyers."
It has emerged that Gordon Brown had declined to put formal pressure on Libya for compensation. He has said the UK will support families making claims.
Speaking about the looming British attempts to claim compensation, the Libyan leader's son said: "Anyone can knock on our door. You go to the court."
And when asked if his answer to the compensation demand would be "no" in the first instance, he replied: "Of course."
The response by Mr Gaddafi - seen by many as the most likely successor to his father's leadership - was welcomed by campaigners as a sign of Libyan "engagement".
Lawyer Jason McCue, who represents some of the victims, said: "It means they have decided to engage with us whereas previously there was no engagement.
IRA victims' lawyer Jason McCue:"PM has made the right decision"
"We always expected this to go to the courts and now it means there will be a process to getting compensation."
In the latest row to follow the release of the Lockerbie bomber, Abdelbaset Ali al-Megrahi, by the Scottish government, the Sunday Times published ministers' letters to campaigners for IRA victims, which were sent last year.
In them Mr Brown wrote that the government did not "consider it appropriate to enter into a bilateral discussion with Libya on this matter".
But on Sunday the PM announced that he was setting up a dedicated Foreign Office team to assist the IRA families' victims - ministers have denied it was a U-turn but opposition leaders say it has left Britain looking "weak".
Schools Secretary Ed Balls told the BBC: "It's not a U-turn because as I understand it what Gordon Brown said last night is the same as he said to families [in the past]."
He added that it had not been possible to pursue a "government-led case for compensation" as Britain had already agreed with Libya to "recognise what had happened in the past, put it behind us and move on".
The entire fabric of the extraordinarily difficult relationship between Libya and the UK is becoming unravelled
He said there had been an attempt to get a government agreement in 2004 for compensation for both the IRA and Lockerbie victims.
"That couldn't be negotiated and the judgement the government made and still makes, is that to attempt to do so now, would both not succeed and sour and damage a relationship which is not about economics or oil is actually about working together to make sure British people are safe from international terrorism."
Mr Balls also implied that British ministers had not wanted the Lockerbie bomber released telling the BBC: "I have to say that none of us wanted to see the release of [Abdelbaset Ali] al-Megrahi. But that wasn't a judgement made by the British government it was a decision made by the Scottish executive."
But shadow foreign secretary William Hague said: "It is a very partial U-turn it is not exactly clear what is going to happen, what support is going to be provided for the families looking for compensation of terrorism in Northern Ireland.
"I think it is time he [Gordon Brown] changed his position that it's not appropriate for the British government to raise this directly with the Libyan government."
He added it would be "very strange" for the British government to helping the families involved but for ministers, in discussions with their Libyan counterparts, not to mention it.
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