Families of the American victims of the Lockerbie bombing, which killed 270 people, have welcomed their final compensation payment from Libya, 20 years after the terrorist atrocity.

Families of the American victims of the Lockerbie bombing, which killed 270 people, have welcomed their final compensation payment from Libya, 20 years after the terrorist atrocity.

Libya handed over $1.5bn (£1bn) to complete the deal first agreed in 2003 between the two governments to make payments to the relatives of the 180 US victims.

The payment means there is no barrier to full diplomatic relations being restored between the US and Libya, five years after Colonel Gaddafi renounced terrorism. The deal to pay the final compensation to the victims was reached in August. Funds were transferred to the US last month and the money was paid this week.

Compensation for the 1986 bombing of a disco in Germany, which killed three people and injured around 200, is included in the deal, and $300m (£200m) for victims of retaliation American air strikes on Tripoli and Benghazi in 1986 will also be paid. However, it is unclear where that money will come from as no go vernment money will be used for those payments.

Families and politicians who have long supported the compensation fight claimed victory after the payments were received, bringing the total paid to each victim's family to around $10m (£6.7m). Two families refused to accept any compensation.

Kara Weipz, the spokeswoman for the Victims of PanAm Flight 103 group whose brother Rick died in the atrocity, said: "Our intent when we went into the civil suit was to find out the whole truth of what happened. That goal hasn't been established, but we held them accountable for being a sponsor of terrorism."

The United States will send its first ambassador to Libya in 36 years following the final payment. The nomination of Gene Cretz had been held up for more than a year, but the diplomat has now won Senate confirmation to the position.