Updated

The Bush administration will keep a U.S. diplomatic and economic squeeze on Libya (search) despite the country's acceptance of responsibility for the bombing of a Pan Am jetliner over Scotland in 1988.

Libya officially accepted responsibility in a letter delivered Friday to the Syrian ambassador to the United Nations, Mikhail Wehbe (search). The letter was part of a $2.7 billion settlement with the families of the 270 people killed in the bombing, most of them Americans.

Each of the families is likely to receive at least $5 million and could receive $10 million from the $2.7 billion fund that Libya will deposit next week in a Swiss bank.

In a joint letter delivered to the Syrian ambassador, whose government currently holds the presidency of the U.N. Security Council (search), the United States and Britain said they were "prepared to allow the lifting" of U.N. sanctions imposed in 1991 once Libya deposited the compensation into an escrow account.

However, a U.S. official said the United States would probably abstain rather than vote for the resolution, would maintain U.S. sanctions against Libya, and had no plan to remove Libya from the State Department's list of countries that sponsor terrorism.

White House spokesman Scott McClellan said, "The Libyan regime's behavior — including its poor human rights record and lack of democratic institutions, its destructive role in perpetuating regional conflicts in Africa and its continued and worrisome pursuit of weapons of mass destruction and their related delivery systems — remains a cause for serious concern."

The United States will intensify its efforts to end "threatening elements" of Libya's behavior and U.S. sanctions on Libya will remain in full force until Libya addresses these concerns, McClellan said in a statement.

Secretary of State Colin Powell (search), in a statement, said "combating the evil of terrorism remains a paramount commitment of the United States. We will not relent in that continuing struggle."

Libyan Ambassador Ahmed A. Own wrote in behalf of his government that Libya has helped bring to judgment two suspects in the bombing and "accepts responsibility for the actions of its officials."

Libya "is committed to be cooperative in the international fight against terrorism," the letter said. "It is also committed to cooperate with efforts to bring those who are suspects to judgment."

Britain's ambassador to the United Nations, Emyr Jones Parry, said the Libyan letter "set out very clearly" that Libya has met the conditions for lifting U.N. sanctions and that the United States agreed.

But in addition to Libya's alleged weapons program, a U.S. official cited human rights violations and meddling in the affairs of other African countries such as Sierra Leone, Chad and Liberia as reasons for not lifting sanctions. The official spoke on condition of anonymity.

On Capitol Hill, Sen. Edward M. Kennedy (search), D-Mass., said Libya's acceptance of responsibility for the bombing was a major victory for the United States and the families of the victims.

He commended the Bush administration and said in a statement that "America must continue working to see that all those involved in the attack are brought to justice." Earlier, Powell and Assistant Secretary of State William Burns met with Flight 103 families in a department auditorium.

Afterward, Daniel Cohen of Cape May Court House, N.J., whose daughter, Theodora, died in the bombing over Lockerbie (search), Scotland, said "the United States should have no relationship whatsoever with what is a criminal, terrorist, murdering regime."

Cohen said "the leader of Libya killed that girl. I don't want to see us make up with him ever, ever, ever under any circumstances."

The United States, meanwhile, will proceed with an ongoing criminal investigation of the bombing, with which Libya promises in its agreement to cooperate.

Libya also pledges in its letter to renounce terrorism in all forms and to cooperate in the international fight against terrorism.

There has been significant progress on the terror front, but "we are not naive," the U.S. official said, and the State Department is not prepared to strike Libya's name from its terrorism list.

The United States will not "stand in the way" of lifting the U.N. sanctions, most likely by abstaining rather than voting for the British resolution, the official said.

The U.N. sanctions bar arms sales and air links to Libya. They were suspended in 1999 after Libya handed over two agents indicted in the Pan Am bombing for trial.

The U.S. sanctions, which put a deep dent in the economy of the oil-rich African country, include travel restrictions and restraints on American business with Libya.

Under the agreement between the families and Libya's lawyers reached Wednesday, eliminating the U.N. sanctions would trigger payment of $4 million to each of the victims' families.

They would receive another $4 million apiece if the U.S. sanctions are canceled and $2 million if Libya is deleted from the terrorism list within eight months.

If not, the victims' families would receive an additional $1 million, although the eight-month deadline could be extended, a U.S. official said.