Secretary of State Colin Powell said Friday that Libya's alleged role in a plot against Saudi Arabia's Crown Prince Abdullah remains an obstacle to further normalization of U.S.-Libyan relations. Mr. Powell met Thursday in New York with Libyan Foreign Minister Abdel-Rahman Shalgham.

The meeting with Mr. Shalgham at the Secretary's New York hotel was the highest-level contact between the two governments in more than 25 years, and underlined the dramatic improvement in relations since Libya renounced weapons of mass destruction last December.

However U.S. officials say considerable work remains to be done in resolving questions about the past involvement in acts of terror by Libya, which remains on the State Department's list of state sponsors of terrorism.

At a New York news conference, Mr. Powell said he raised with his Libyan counterpart the issue of the Saudi terror plot, in which Libya is reported to have recruited dissidents in Saudi Arabia two years ago in a conspiracy against the life of Crown Prince Abdullah.

"I conveyed to my Libyan colleague that it was an outstanding issue," said Mr. Powell. "It required continued inquiry and investigation, and that it would be a problem in our relationship and in the road map as we go forward until the matter is cleared up. But he did not have any information for me that advanced my knowledge of the subject or removed the problem."

A senior U.S. official who briefed reporters on Thursday's meeting said the Secretary of State expressed serious concern about the issue, and that Mr. Shalgham reiterated an assurance that Libya has no intention to settle any future dispute with a fellow Arab country with violence.

The official said the United States also has concerns about human rights practices in Libya, including the case of five Bulgarian nurses and a Palestinian doctor sentenced to death earlier this year for allegedly infecting hundreds of Libyan children with the AIDS virus in 1999. Amnesty International and the European Union have also criticized Libya's handling of the case.

U.S.-Libyan relations have nonetheless improved markedly since last year, when Libya accepted responsibility for downing a U.S. Pan Am jetliner over Scotland in 1988 and agreed to eliminate its chemical and biological weapons, allowing U.S. experts to verify compliance.

President Bush earlier this week lifted most remaining U.S. economic sanctions against Libya, which cleared the way for another Libyan compensation payment to families of victims of the Pan Am Flight 103 attack.