Executive director of the Kadhafi Foundation, Salah Abdessalam, told AFP that fresh talks would begin on January 15 after a delay was called "for psychological reasons".

An official said earlier that the talks, originally set to resume on Wednesday, had been postponed after a court ordered a retrial for the Bulgarian nurses convicted of causing the infections.

He said the meeting had been put off owing to the effect on the families of the Libyan supreme court's decision on Sunday to overturn the death sentences of five Bulgarian nurses and a Palestinian doctor.

The discussions are aimed at finding a deal on compensation for the victims and stoked hopes in Bulgaria that the nurses could one day be freed. Bulgaria said last week it was creating a fund for AIDS-infected children in Libya.