The British Foreign Secretary, Mr Robin Cook, yesterday expressed "qualified optimism" that the Lockerbie bomb suspects would be handed over by Libya, as Tripoli indicated a deal was on the way, but not imminent.
The United Nations Secretary-General, Mr Kofi Annan, last night met the Libyan leader, Col Muammar Gadafy, to try to persuade him to hand over the two suspects for trial in Holland by Scottish judges.
Mr Annan described the talks as "fruitful and positive", but no deal was reached.
He said Libya had indicated it "believes that it ought to be possible to find answers to all . . . outstanding issues relating to this matter.
"It will require some time but not an inordinate amount."
The Libyan Foreign Minister, Mr Omar al-Muntasser, said after talks with Mr Annan: "I am sure that the efforts of the Secretary-General will show positive results very soon."
Mr Cook said he hoped the trial - at a specially-built courtroom on a Dutch airbase - could begin before the 10th anniversary of the bombing, on December 21st.
He emphasised the date was not a deadline but said relatives of the dead would find the anniversary easier to cope with "if they knew the suspects had been surrendered and there's a real prospect of the facts coming out in the open".
A breakthrough became possible this summer after Britain and the US dropped their insistence that Mr Abdel Basset Ali Mohammed al-Megrahi and Mr Lamen Khalifa Fhimah should stand trial in Scotland.
Instead they have agreed to a trial in the Netherlands under Scottish law.
Libya has agreed to the principle of a trial abroad for the pair, but has resisted Britain and America's insistence that if convicted they should serve their sentences in Scotland.
Mr Cook yesterday repeated his insistence that the point was nonnegotiable.
"The crime was committed in Scotland, logically the place where they should serve their sentence is Scotland," he told BBC1's Breakfast with Frost.
"We have no objection to the United Nations, Libya, sending any number of observers to make sure that the standards are humane and people are properly looked after.
"But they must serve their sentence in Scotland."
Despite the lack of a breakthrough, Mr Cook said he was "very encouraged" by Mr Annan's talks with Col Gadafy.
"I would sum up our mood as one of qualified optimism.
"Kofi has been successful in getting across the message that we are serious about this trial, there is no hidden agenda, all we want is for justice to take its course."
Some 270 people, mostly Americans, died when Pan Am flight 103 exploded over the Scottish town on December 21st, 1988.
Much of the authorities' information about the explosion has had to be kept secret from relatives because it might be needed as evidence in a trial.
Libyan officials have said the country's congress would have to approve any handover of the suspects.
The assembly will meet tomorrow to consider the issue but officials said the debate could go on for days.
The Libyan state news agency said no handover would take place in time for the 10th anniversary. But an unnamed Libyan Foreign Ministry official was quoted as saying "a solution to this crisis is within reach".
Dr Jim Swire, spokesman for the British victims' families, said he was delighted that Mr Annan and Col Gaddafi had met.