Libya will refuse to pay compensation to the families of people killed by Irish republican bombs they say were made using Libyan-supplied explosives, the son of Libyan leader Muammar Gaddafi said.

Saif Al-Islam said Libya would fight any claims in the courts, putting him at odds with British Prime Minister Gordon Brown who said he would support the compensation claims.

"Anybody can knock at our door and ask for money. But you go to the court, we have lawyers," Saif told Sky News."    

British lawyer Jason McCue, who represents the families of Irish Republican Army (IRA) victims, said he was prepared to take the compensation claims to court, but hoped a deal could be reached without legal action.

"Everyone realises in litigation that a settlement is the best way to go and I am sure Libya will realise that is the best way for Anglo-Libyan relations," he told BBC radio.

The families say they have evidence that Libyan-supplied explosives were used in a string of IRA attacks, including the 1987 blast at a remembrance day service that killed 11 people in the town of Enniskillen, Northern Ireland, the Sunday Times reported.

The Libyan shipments also helped the IRA carry out the 1996 bombing that devastated the centre of Manchester, northern England, and several explosions in London, the report added.

The British government says Libya shipped weapons in the 1980s and 1990s to guerrillas fighting to end British rule of Northern Ireland. A boat, the Eksund, was seized off the French coast in 1987 and found to be carrying weapons for the IRA.

McCue could not immediately be reached for comment.

Britain's improving relations with Libya have come under close scrutiny after the early release of a former Libyan agent convicted of the 1988 Lockerbie airliner bombing in which 270 people were killed.

The United States government condemned the decision to free Abdel Basset al-Megrahi and Brown's opponents have questioned whether he pressured the Scottish government to release him in order to help Britain's business interests, a charge he denies.

Britain's opposition Conservatives accused Brown of caving in to public pressure to support the IRA victims' families after initially saying the government would not directly engage with Libya on the arms issue.

Brown's spokesman denied there had been a government U-turn and said officials would "facilitate not negotiate" in the compensation process.

Saif accused politicians in the United States and Britain of "disgusting behaviour" over the Lockerbie case.

"They are trying to use this human tragedy ... for their own political agenda," he told Sky News. "It is completely immoral."    

With a British election due within a year, politicians have used the case to advance their own cause, Saif added.

The row over ties with Libya, coupled with a rising death toll in Afghanistan, have made for a turbulent return to work for Brown after his summer holiday. Britain is mired in recession and the prime minister has only a few months to turn around his poll ratings before the election.

Gaddafi's son angered the United States and relatives of those killed in the Lockerbie bombing by accompanying Megrahi to a warm welcome on his arrival home in Tripoli. - Reuters