Washington  - US Secretary of State Condoleezza Rice will travel to Libya this week in a further step of renewing relations between the two countries after decades of tension.

Rice will be the first secretary of state to visit Libya since 1953 and will meet with Libyan leader Moamer Gaddafi after arriving from Portugal on the September 4-7 trip.

Rice's visit comes after the two countries agreed to establish a fund to compensate the families of the US victims of terrorist attacks involving the Libyan government, and after Tripoli abandoned weapons of mass destruction programmes in 2003.

"This truly is a significant, historic visit," State Department spokesman Sean McCormack said. "It's indicative of the kind of evolving relationship that we have, one in which we are building trust, we are building on areas of mutual interests and mutual benefit."

The United States and Libya signed the compensation agreement August 14 and the United States expects the money will be transferred to the fund soon, McCormack said.

The deal covers US victims of the 1998 bombing of a Pan Am flight over Lockerbie, Scotland in 1988 and of a Berlin disco in 1986.

US-Libyan relations were restored in early 2004 after more than two decades of frosty relations after Tripoli agreed to turn over its weapons of mass destruction programmes, and US sanctions were lifted.

Rice will also make stops in Tunisia, Algeria and Morocco. (dpa)