Britain has said progress has been made with Libya regarding the North African nation's compliance with United Nations sanctions stemming from the 1988 bombing of Pan Am flight 103 over Lockerbie, Scotland.

Diplomats from the United States, Britain and Libya met in London Thursday in the latest round of talks on resolving the Lockerbie dispute.

A British Foreign Office spokesman said the atmosphere was constructive and that progress was made. He offered no details but said more talks are planned in the future.

The U.S. side was led by William Burns, the assistant secretary of state for the Middle East.

Ahead of the talks, the State Department said Mr. Burns would press the Libyans to comply with the U.N. Security Council resolution related to the Pan Am 103 bombing, which killed 270 people.

The U.N. wanted Libya to accept responsibility for the attack, pay compensation to the victims' families, renounce terrorism and cooperate with the investigation.

There was much anticipation about Thursday's meeting following reports that Libya is ready to pay the victims' families $2.7 billion in compensation.

The British Foreign Office spokesman said the families will be briefed about Thursday's talks, but he declined to say if the compensation plan had been discussed with the Libyans.

A New York law firm representing the families of the American victims said last week that Libya would pay the money in stages as U.N. and U.S. sanctions are lifted, and Libya is removed from the U.S. list of state sponsors of terrorism.

The Libyan government denied making the offer. However, Libyan businessmen said they came up with the proposal in hopes of having the sanctions lifted.

The three-nation talks began last year after a Scottish court convicted a Libyan spy for smuggling explosives aboard Pan Am flight 103. A second Libyan agent was acquitted.