Washington  - US Secretary of State Condoleezza Rice praised Congress on Friday for passing legislation that allows Libya to settle all pending lawsuits by victims of terrorism.

Under the arrangement, Libya will place money into a fund to compensate victims and their families, including those who have not already been in connection to the 1988 Pan Am bombing over Lockerbie, Scotland.

Libya is to provide about 800 million dollars for compensation into the fund to settle existing lawsuits and be immune from any further legal action.

"We hope administration efforts, working with the Congress, will help our fellow citizens close a painful chapter in their lives," Rice said.

"The United States also looks forward to expanding its relationship with Libya and its people as we resolve contentious issues from the past," she said.

The agreement is a key part of Washington's renewal of ties with Libya that began in 2003 after Tripoli's agreement to surrender all of its weapons of mass destruction programmes.

Congress passed the legislation on Thursday. (dpa)