Italian Prime Minister Silvio Berlusconi said on Saturday Rome will invest five billion dollars in Libya over the next 25 years under a deal to resolve colonial era disputes that have long tarnished ties between Rome and Tripoli.

Berlusconi made his comments during a visit to the Mediterranean city of Benghazi where he is due to meet Libyan leader Moamer Kadhafi and seal a friendship and cooperation accord with the oil-rich north African nation.

"The accord will provide for 200 million dollars a year over the next 25 years through investments in infrastructure projects in Libya," Berlusconi said in remarks translated into Arabic.

He had told a Libyan newspaper in an interview published on Saturday that the deal would allow the "turning of the page on the past."

Italy and Libya, which gained independence in 1951, have spend years negotiating a wide-ranging treaty covering compensation for colonial times.

"The friendship and cooperation agreement that we will sign on Saturday opens all avenues for the consolidation of our economic and social partnership and will increase cooperation between the two countries," Berlusconi told Oya newspaper.

US Secretary of State Condoleezza Rice is set to follow in Berlusconi's footsteps next week, for the first visit by such a high-ranking US official to Libya since 1953.

Berlusconi's trip to Libya -- his second since June -- follows agreement on the main points of the 25-year pact that will notably see the building of a coastal motorway across Libya from the Tunisian border to Egypt.

Funding for the road was promised by Berlusconi on a visit to Tripoli in 2004, when he headed a previous administration.

Libyan's ambassador to Rome, Hafedh Gadur, told AFP the wide-ranging accord would cover illegal immigration, infrastructure projects and the fight against terrorism.

He also said Berlusconi was expected to extend Italy's apology for its military occupation and colonisation of Libya.

Berlusconi last saw Kadhafi in June when they discussed the implementation of a December 2007 accord on joint maritime patrols to curtail the flow of illegal immigrants from Africa to Europe.

Italy has been pushing for rapid implementation of the deal, as thousands continue to make the perilous voyage across the Mediterranean.

Earlier this month Berlusconi met Libyan Prime Minister Baghdadi Mahmudi in Italy to discuss how to settle their outstanding disagreements, and a Libyan delegation has been in Rome for several days to negotiate the cooperation pact.

Formerly a part of the Ottoman Empire, Libya was occupied by Italy in 1911 before becoming a colony in the 1930s. The country gained its independence in 1951 after a brief period under a UN-mandated Franco-British administration.

Berlusconi's visit to Benghazi -- which lies 1,000 kilometres (650 miles) east of Tripoli -- coincides with the anniversary of the coup that brought Kadhafi to power in September 1, 1969.

Libya has welcomed a host of foreign dignitaries since Kadhafi ended years of diplomatic isolation with his 2003 announcement that Tripoli was abandoning efforts to acquire weapons of mass destruction.

Rice will be visiting shortly after an agreement with Libya to compensate US victims of Libyan attacks, and US reprisals, from the 1980s.

US-Libya relations, suspended in 1981 due to Tripoli's alleged support of terrorism, were restored in early 2004 after Kadhafi's weapons pronouncement.