The Bush administration on Monday suggested Libya (search) could expect long-sought diplomatic recognition from the United States if it cleaned up its record on human rights and terrorism.

U.S. officials gave no indication that an embassy would be opened in Tripoli within days, as Seif Al-Islam Gadhafi, son of the country's leader, Moammar al-Qadhafi (search), said in the Libyan capital.

But the trend clearly pointed in that direction. "If they continue to make progress along the pathway that we have laid out, we, again, will meet their acts of good faith in return," State Department spokesman Sean McCormack said.

In March, the administration notified Congress it planned to establish full relations with the once outcast government by the end of the year, despite suspicions in Saudi Arabia that Libyan agents plotted to try to assassinate then-Crown Prince Abdullah in late 2003.

A U.S. ambassador will be sent to Tripoli and 19 American diplomats working out of a hotel in Tripoli will move into a temporary embassy facility by the winter, then-acting Undersecretary of State William J. Burns told the House International Relations Committee.

Last weekend, Sen. Richard Lugar, chairman of the Senate Foreign Relations Committee, said U.S. and Libyan officials were negotiating the opening of the embassy and removal of the Libyan government from a State Department list of countries that sponsor terror.

Diplomatic relations were severed in 1980 and U.S. economic sanctions remain in place, costing Libya an estimated $30 million a year in lost business.

Libyan terrorism reached a high point in 1988 with the bombing of a Pan Am jetliner over Scotland in which 270 people were killed.

al-Qadhafhi agreed, however, to pay $2.7 billion in reparations to the victims' families and gave up the pursuit of weapons of mass destruction, shipping much of Libya's weapons technology to the United States.

"We have a dramatically different relationship with Libya than we had over recent history," McCormack said Monday. "That changed relationship had its roots in the Libyan strategic decision to give up its weapons of mass destruction program."

"In exchange for their acts of good faith we, in turn, have met their actions with our actions of good faith," he said. "And we are engaged with them now in a dialogue on a variety of issues," he said, citing human rights, democracy and terrorism.

"We have certainly come a long way from where we were in our relationship," McCormack said.