170 people died when the UTA aircraft exploded over the Sahara

The award is payable to relatives of the seven US victims aboard UTA Flight 772, and the aircraft's American owner.

Libya has already agreed to pay $1m compensation to the relatives of each of the 170 people on board the flight - but has denied any link to the bombing.

It paid compensation over a similar attack over Lockerbie in Scotland.

This award proves that the rule of law will always prevail over state-sponsored terrorism

Stewart Newberger, victims' lawyer

Lawyers for the US victims of UTA 772 say Libya has until 25 February to decide whether to appeal against the order.

The huge award is made against Libya and six named officials.

It represents:

the value of the aircraft

compensation for the pain and suffering of the victims

compensation for the pain and suffering of the victims' families

money the victims would have earned if they had lived

interest backdated to the day of the bombing.

Under American law, awards against individuals, though not the Libyan state, are tripled because it is a terrorism case.

"This award proves that the rule of law will always prevail over state-sponsored terrorism," said Stuart Newberger, a lawyer for the victims' families.

The seven US victims included Bonnie Pugh, whose husband Robert was then the US ambassador to Chad.

Sanctions lifted

The Lockerbie compensation deal was part of a package negotiated in secret for months.

It referred to the attack, in 1988, that killed 270 people, including all those on the aircraft and others on the ground.

Under the deal, Libya restored its ties with the West by promising to renounce terrorism and its nuclear, chemical and biological weapons programmes.

In return, leading Western states ended Libya's diplomatic isolation.

Colonel Gaddafi has opened up and been welcomed by the West

Sanctions were lifted, diplomatic relations restored, and high-profile visits and multi-million dollar trade deals followed.

But in the background, this latest compensation case was slowly making its way through the American courts.

Proceedings began in 2002, and in April last year, a court ruled that Libya was directly responsible for the UTA bombing.

The plane was flying from Chad to Paris on 19 September, 1989, when a bomb on a suitcase exploded over the Sahara. All 170 people on board were killed.

Much of the evidence came from a criminal case in France, which in 1999 found Libya and the same six officials guilty of blowing up the aircraft.

Libya has refused to hand them over to France.

In August last year the US court sat for three days to hear evidence over the level of compensation, and the latest ruling is the result of that hearing.

Libya has not said whether it will appeal, but the American lawyers appear confident of getting the money.

They say that if Libya does not pay up, they will be able to get a court order to obtain it from American companies with which Libya is now doing business.