WASHINGTON - Libya has deposited a "substantial amount" of money into a compensation fund for victims of terrorism, a senior U.S. official said on Thursday.

"We have received a substantial amount of money in a U.S. account towards compensating the U.S. victims and families with terrorism related claims against Libya," said the official, who declined to be named.

He refused to say how much money the Libyans had handed over. The fund, which is estimated eventually to total about $1.8 billion, was agreed on in August by the United States and Libya to settle terrorism cases on both sides.

"We believe that direct deposit of these funds into a U.S. account is evidence of Libya's commitment to fully implementing the claims settlement agreement," he told reporters.

American victims covered by the fund include those who died in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, which killed 270 people, and the 1986 attack on a West Berlin disco that killed three people and wounded 229.

It also provides compensation for Libyans killed in 1986 when U.S. planes bombed Tripoli and Benghazi in retaliation for the disco attack. Forty people died, including Libyan leader Muammar Gaddafi's adopted baby daughter.

The dispatch of a U.S. ambassador to Libya had been delayed by lawmakers until Tripoli put money into the fund. It was unclear whether the infusion of funds would clear the way for U.S. ambassador Gene Cretz, to now go to Tripoli.

Appointing a U.S. ambassador was seen as one of the rewards for Libya giving up its weapons of mass destruction program in 2003, which led to a warming of ties between the former foes.

Agreement on creating the fund also paved the way for U.S. Secretary of State Condoleezza Rice to visit Libya last month -- the first by a top U.S. diplomat to the former pariah state in half a century and a tangible sign of improved ties.

The official said the United States would continue to work with Libya to get the "expeditious receipt" of the remaining agreed funds to compensate victims' families.

Money can be paid out to families once Libya's immunity has been granted from court cases and this can happen only when Rice has certified to Congress that the necessary funds have been received to cover outstanding settlement claims.

"Until the claims settlement agreement is fully implemented the U.S. is under no obligation to restore Libya's immunities, or dismiss claims in U.S. courts," said the official.

Neither side has provided details on how much money each side will put into the fund or where it will come from. The United States has made clear any of its possible contributions will not be drawn from U.S. taxpayer funds.

U.S. officials and diplomats say Libyan ministers have in recent weeks been calling in representatives from U.S., French, Libyan and other companies doing business there to ask them to put money into the fund.