The United States and Libya sealed a historic turnaround after decades of terrorist killings, American retaliation, suspicions and insults with US Secretary of State Condoleezza Rice's peacemaking visit today with Muammar Gaddafi, Libya's mercurial strongman.

"The relationship has been moving in a good direction for a number of years now and I think tonight does mark a new phase," Rice said after a traditional Ramadan dinner - the evening meal that breaks the day's fast during the Muslim holy month - at Gaddafi's official Bab el-Azizia residence.

It is the same compound hit by US airstrikes in 1986 in retaliation for a deadly Libyan-linked terrorist attack in Germany. The attack killed Gaddafi's baby daughter.