London  - Leading Protestant politicians from Northern Ireland held a first round of talks with Libyan officials in London Tuesday over the delicate issue of compensation for victims of "Libyan-sponsored terrorism" in the troubled British province.

Jeffrey Donaldson, a member of parliament (MP) for the Protestant Democratic Unionist Party (DUP) in Northern Ireland, said the talks at the Libyan embassy in London had been "very productive."

The discussions, the first-ever direct encounter between the two sides, had marked a "significant step" towards resolving the issue of compensation payments.

"This is a step in the process that will hopefully lead to a settlement of this issue," Donaldson said.

Leading Protestant politicians insist that the regime of Libyan leader Moamer Gaddafi should be made to pay compensation to families of victims of the Northern Ireland conflict, as Libya had supplied the guns and explosives used by the former terrorist organization, the Irish Republican Army (IRA).

The 30-year conflict between Protestants and Catholics in Northern Ireland was settled with a peace agreement signed in 1998. Since then, the IRA has laid down its arms, while dissidents unhappy with the policy have staged further attacks.

Campaigners renewed their claim for compensation after the release from prison in Scotland a month ago of Abdel Basset al-Megrahi, a Libyan convicted of the 1988 bombing of a Pan Am airliner over the Scottish town of Lockerbie.

They said the release of al-Magrahi on health grounds added extra urgency to their demands, especially as the 270 victims of the Lockerbie disaster had received compensation payments.

However, Libya has said officially that the question of compensation is one for the courts to deal with, and not one to be negotiated at government level.

Donaldson and his delegation are expected to travel to Tripoli for talks with the Libyan leadership next month.  dpa