The officials, speaking to Agence France-Presse (AFP) on condition of anonymity, said they understood Libya planned to notify the UN Security Council of its acceptance of responsibility on August 14 should the private settlement go through.

But they stressed that the date depended on developments.

"August 14 is what we're looking at, but these things have fallen through in the past so we're not holding our breath," said one official, referring to past instances where a deal seemed imminent but did not come to pass.

"There is movement and I would look to next week for developments," a second official said, warning however that no deal is yet done.

A bomb destroyed a PanAm Boeing 747 jet over the Scottish town of Lockerbie on December 21 1998, killing all 259 people on board plus 11 on the ground.

Libya's acceptance of responsibility for the bombing would follow immediately the signing of a 2.7-billion-dollar settlement deal with the families of the dead.

Glenn Johnson, president of The Victims of Pan Am Flight 103, said the final agreement on setting up the escrow account was expected to be signed on August 14, following negotiations this week in London.

The Libyans then have 30 days to deposit the first payment, after which they can formally notify the Security Council of their acceptance of responsibility, he said.

"But it seems the Libyans, who have been dragging this out for years, suddenly want to speed the process up, so it's possible that everything will be done on the 14th," Johnson told AFP.

At the State Department, which is closely watching the developments, deputy spokesman Philip Reeker declined to comment on the status of the talks between Libya and the families or the possibility of a deal being reached.

However, he sounded an optimistic note, telling reporters: "Progress continues to be made there."

Previous hopes for a deal have been dashed but talks picked up steam in March when Libyan Foreign Minister Abdel Rahman Shalgham said his country would accept civil responsibility for the bombing and pay compensation.

Then, in an interview with a U.S. television network on Sunday, Libyan leader Moamar Kadhafi said he believed the Lockerbie case was "about to be closed."

"The issue is over," Kadhafi said on ABC television. "The concerned parties, the legal experts, found a formula."

A compensation deal accompanied by an acceptance of responsibility would set in motion a process under which UN and then possibly U.S. sanctions against Libya could be lifted.

As the deal is envisaged, Libya would pay the each of the families of the victims 10 million dollars in installments based on the lifting of the sanctions and the removal of Libya from the US list of "state sponsors of terrorism."

U.S. officials, however, stressed that the linkages exist only in the private deal being worked out between the families and Tripoli and that Washington may or may not decide to follow them.

"We have our own criteria for determining these things," one official said. "We may go along with the outline, but we are certainly not bound by it."

Under the expected deal, the first four million dollars in compensation would be disbursed to the victims' families when UN sanctions against Libya are lifted following its acceptance of responsibility.

Those sanctions were suspended but not lifted after Tripoli handed over two former Libyan intelligence agents in the case, one of whom was convicted by a Scottish court in the Netherlands in January 2001.

The acceptance of responsibility before the United Nations would pave the way for a dialogue between Libya and the United States about the lifting of separate U.S. sanctions.

A further four million dollars would be delivered to each family once U.S. sanctions are lifted and the final two-million-dollar payment would be made if Libya is removed the U.S. list of state sponsors.