Former British Prime Minister Tony Blair could face a lawsuit from over 200 victims of IRA terrorism who claim that he conspired with late Libyan leader Muammar Qaddafi to block a compensation claim against the Tripoli regime.

Britain's Sunday Telegraph newspaper reported that it has seen an e-mail which impies that Blair helped to broker a 2008 agreement between Qaddafi and former U.S. President George W. Bush in which Libya agreed to pay $1.5 billion in compensation to American victims of Libyan-sponsored terror. Under the terms of the agreement, the Qaddafi regime received immunity from future terrorism-related lawsuits and invalidated the claims of British victims suing Libya in U.S. courts.

The e-mail in question, dated June 8, 2008 was written by Sir Vincent Fean, then the British ambassador to Libya, to aides of the former Prime Minister. It reads, in part, "On USA/Libya, [Blair] should explain what he said to President Bush... to keep his promise to [Qaddafi] to intervene after the President allowed US courts to attach Libyan assets ... It would be good to get these issues resolved, and move on ... [The British government] is not involved in the talks, although some British citizens might be affected by them (Lockerbie, plus some UK Northern Irish litigants going to US courts seeking compensation from Libya for IRA terrorist acts funded/fuelled by Libya)."

Blair has repeatedly denied playing any role in the compensation agreement, a claim his spokeswoman repeated to The Sunday Telegraph "He has never had anything to do with it and he has never discussed any such terms with President Bush. The e-mail you reference merely expresses Government policy of the time which was to re-engage with the Libyans after they gave up their WMD programme and chose to cooperate rather than sponsor terrorism."

Qaddafi's regime was accused of supplying Semtex plastic explosive to the Provisional Irish Republican Army, which used it in multiple terror attacks on the British mainland. A lawyer for the firm representing the victims claims that the e-mail appeared to "belie [Blair's] denials of wrongdoing."

Click for more from The Sunday Telegraph