A report by the International Atomic Energy Agency shows that Libya had the capability to produce plutonium, suggesting its nuclear program was further advanced than first believed. The greatest worry for the IAEA is how Libya was able to obtain the technology.

An IAEA report says Libya used technology and know-how bought on the black market to process small quantities of plutonium that can be used in nuclear warheads. Diplomats cite a report drawn up by the head of the IAEA, Mohamed ElBaradei, who is traveling next week to Tripoli to discuss progress on dismantling Libya's nuclear program.

The IAEA has until now maintained that this program was in its infancy, but Washington has always insisted that it was relatively advanced.

Jacques Baute, a senior IAEA official who visited Libyan nuclear facilities last year, says the agency has more work to do before making a final decision.

"We are far from drawing conclusions," he said. "There has been one fact-finding mission at the very end of the year and not even 10 days of additional activity a couple of weeks ago so we are in the very early stages. However, clearly the feeling we all get is that the big issue, the big threat today is not even Libya itself. The Libyan case will be managed without too many problems. The issue is the discovery of this black market and who else has got what Libya has been able to get. That's really the challenge because Libya is a very small country with a very small infrastructure in terms of technology and research capabilities."

Libya's cooperation with the IAEA revealed a global black market in nuclear material headed by Pakistani scientist Abdul Qadeer Khan.

The IAEA board meets in March to discuss Libya as well as Iran, which was also found to be producing plutonium in secret.