A leading Arabic newspaper says Libya is considering abolishing the death penalty and releasing five Bulgarian nurses sentenced to death on charges of infecting 400 children with HIV.

Asharq al-Awsat, quoting Arab diplomats close to the Libyan government, reports Libyan authorities will ask the nurses to pay compensation to a charity headed by Libyan leader Muammar Gadhafi's son, Saif al-Islam.

The newspaper says the agreement was drafted by the United States and European Union, which have condemned the nurses' death sentences.

Last month, President Bush called on Libya to release the nurses after discussing the case at the White House with Bulgarian President Georgi Parvanov.

The nurses were convicted of knowingly infecting 400 Libyan children with the AIDS virus - a charge they deny. More than 40 of those children have died.

Libya's Supreme Court is to hear their final appeal November 15.

Some information for this report provided by AP and AFP.