The United States has resumed diplomatic relations with Libya (search) after a 24-year break, the State Department said Monday. It was the same day the United States also established relations with the Iraqi government, after severing ties with Saddam Hussein's regime in 1990.

The State Department had established an informal U.S. Liaison Office (search) in Tripoli a few months ago when weapons inspectors and other business executives had started operating in Libya and needed diplomatic services such as passport and visa assistance. The statement by U.S. Assistant Secretary of State William Burns (search) on Monday announced the formal inauguration of the office and resumption of direct diplomatic ties.

"[Burns] ... noted that Libya would be taking its own steps to establish diplomatic representation in the U.S. Both sides confirmed that these actions would assist the step-by-step process of strengthening relations as Libya fulfills each of its commitments and the U.S. continues to respond in kind," reads a press release from the liaison office.

The formal resumption of relations does not mean that full diplomatic ties have been re-established. This will not happen until Libya has been removed from a list of state sponsors of terrorism (search) that the State Department annually submits. Seven nations are currently on that list.

But the new office is considered the latest move by the Bush administration to reciprocate for Libyan leader Muammar al-Qaddafi's (search) promise last December to dismantle his chemical, biological and nuclear weapons programs.

Monday's announcement followed a meeting among Burns, al-Qaddafi and other Libyan government ministers.

In those meetings, the two sides "held detailed discussions on Libya's commitment to support the global war on terrorism, to repudiate the use of violence for political purposes and to implement its pledge to cease all support for terrorism," Burns said. 

Though reports have suggested that al-Qaddafi had a hand in a plot to assassinate Saudi Arabian Crown Prince Abdullah, the State and Defense departments have said the Libyan leader has cooperated in efforts to dismantle its weapons programs. The United States restored trade relations with Libya in April when the U.S. lifted a travel ban on the country and allowed imports of Libyan oil. Al-Qaddafi also pledged in May to cut military trade with Iran, Syria and North Korea, still identified as rogue states by the State Department.

Burns said that he and J. Cofer Black, who heads the State Department's office to counterterrorism, had discussed with al-Qaddafi "recent public allegations regarding Libya and Saudi Arabia." He did not indicate al-Qaddafi's response to the allegations.

State Department spokesman Adam Ereli said he could not comment on details of that conversation.

"I don't have that level of detail. ... We do not have enough to make a conclusive judgment, I think, one way or the other," he said. Ereli added that if the allegations were true, "it would call into question continued development of relations with Libya."

The assassination plot against Prince Abdullah, Saudi Arabia's de facto ruler in the absence of King Fahd, who is gravely ill, has been mentioned by two men in custody. Abduraham Alamoudi, an American Muslim leader jailed in Alexandria, Va., on federal charges of having illegal financial dealings with Libya, and Col. Mohamed Ismael, a Libyan intelligence officer currently in Saudi custody -- both have suggested that Libya had been plotting against the Saudi prince.

Burns said that in the meeting with al-Qaddafi, the U.S. delegation expressed appreciation for Libya's humanitarian assistance to civil war victims in Darfur, Sudan, and recalled its decision to accept responsibility for the bombing of a Pan Am airliner over Lockerbie, Scotland, in 1988 that killed 270 people. Last year, Libya agreed to pay $2.7 billion to the victims' families, enabling them to be freed of U.N. sanctions.

The move to resume relations with Libya follows another surprise on Monday, when the U.S.-led coalition handed over sovereignty two days early to the Iraqi interim government (search). Afterward, the Coalition Provisional Authority (search) press offices announced that U.S. Ambassador to Iraq John Negroponte (search) was on the ground in Baghdad and would be presenting his credentials shortly.

While the State Department did not confirm Negroponte's arrival in Iraq, Ereli said, "The U.S. embassy and the U.S. government have hit the ground running" there.

Negroponte will be in charge of a 1,700-person diplomatic mission, the largest in the world. About 1,000 employees will be American. The Department of Defense will continue to keep 130,000 U.S. troops in the country as well.

"Ambassador Negroponte is the president's representative to the government of Iraq. Our bilateral relations with Iraq will be handled by the ambassador, reporting to the president, through the secretary of state," Ereli said. 

Fox News' Teri Schultz and The Associated Press contributed to this report.