The Bush administration said on Monday it was keeping U.S. sanctions against Libya in place but promised to take "tangible steps" to improve relations if Tripoli follows through on its pledge to get rid of its weapons of mass destruction.

"Despite the positive developments, the crisis with respect to Libya has not been fully resolved, and I have therefore determined that it is necessary to continue the national emergency declared with respect to Libya and maintain in force the comprehensive sanctions against Libya," U.S. President Bush said in a letter members of Congress issued during his visit to St. Louis.

But Bush also pledged: "As Libya takes tangible steps to address those concerns, the United States will in turn take reciprocal tangible steps to recognize Libya's progress."

Although the president did not spell out what steps he would take if Libya follows through, the administration could roll back some of the sanctions later this year as a goodwill gesture, leaving others in place for leverage. U.S. officials said no decisions have been made.

Bush's announcement was widely expected despite comments from Libya's prime minister suggesting his government was pressing for their quick removal.

Tripoli and the families of the 1988 Lockerbie bombing victims agreed on an April deadline for ending the U.S. sanctions, although a lawyer for the families said the deadline could be extended. The United States has long maintained it is not bound by the agreement between the families and Libya and would remove its sanctions only when it deemed appropriate.

Lifting the sanctions would pave the way for U.S. oil companies, including Oasis Group that includes Marathon Oil Co., ConocoPhillips and Amerada Hess to resume activities in Libya, which they had to abandon when expanded U.S. sanctions forced them to pull out in 1986.

LIBYA MAY REAP REWARDS

In a surprise announcement last month, Libya pledged to abandon its weapons of mass destruction programs and allow unconditional inspections.

Bush praised the move as "an important and welcome step toward addressing the concerns of the world community." He said Libya stood to reap rewards through better relations with the United States if it follows through on its commitments.

"Libya's agreement marks the beginning of a process of rejoining the community of nations, but its declaration of December 19, 2003, must be followed by verification of concrete steps," Bush said in a statement said.

He also held up Libya as a possible model for other nations after the invasion of Iraq.

"Leaders around the world now know weapons of mass destruction do not bring influence or prestige, they bring isolation and unwelcome consequences. And nations who abandon the pursuit of these weapons will find an open path to better relations with the United States of America," Bush said at a fund-raiser in St. Louis.

No weapons of mass destruction have yet been found in Iraq.

Libya has agreed to take responsibility for the Lockerbie bombing and pay $2.7 billion in compensation, or up to $10 million for each of the 270 people who were killed, starting with an initial $4 million for each family once U.N. sanctions were ended. That occurred on Sept. 12.

Another $4 million is to be paid if Washington lifts its sanctions and $2 million more if Libya is dropped from the U.S. list of state sponsors of terrorism within eight months of Libya placing the $2.7 billion into the escrow account.

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