The UN Security Council and United States on Friday lifted sanctions on Libya's central bank in a bid to ease a cash crunch in a post-Gaddafi era, diplomats said.
The UN council ended a freeze on the assets of the Central Bank of Libya and the Libyan Foreign Bank (LFB), which was ordered in February as part of sanctions against late strongman Muammar Gaddafi.
The US government said it would be freeing more than $30 billion dollars of assets belonging to the central bank and LFB in a bid to help the new Libyan government, which overthrew Gaddafi after months of bloody fighting.
The Tripoli authorities have stepped up calls in recent weeks to release the estimated $150 billion frozen abroad to help pay salaries and keep services running.
In a letter to the Security Council, National Transitional Council chief Mustafa Abdel Jalil said the release of funds was "essential for the economic stability of Libya."
The official request for the lifting of sanctions was made one week ago and no objections were made by any of the council's 15 members enabling the assets freeze to be lifted on Friday.
On top of the $30 billion held in the United States, Britain's Foreign Secretary William Hague said his government would immediately act to free about 6.5 billion pounds ($10 billion) held in Britain.
The easing of the sanctions "marks another significant moment in Libya’s transition," Hague said in a statement.
"It means that Libya's government will now have full access to the significant funds needed to help rebuild the country, to underpin stability and to ensure that Libyans can make the transactions that are essential to everyday life."
Hague said Britain would pressure the European Union to quickly release frozen sums.
The White House said it had "rolled back most US sanctions on the government of Libya." The move unlocks all Libyan government and central bank assets within US jurisdiction.
"These measures, along with the steps taken today by the United Nations Security Council, will allow the Libyan government to access most of its worldwide holdings," the White House said in a statement.
On a UN level, an arms embargo and an assets freeze against Gaddafi's family and associates remains in place, along with some financial institutions including Libya's key sovereign wealth fund.
The US government also said it was keeping sanctions against the Gaddafi family.
Central banks around the world had been nervous about releasing funds frozen under sanctions because they considered there were not sufficient guarantees about where the money would go.
"There are huge amounts being held and treasuries were nervous they could face legal action later," one western diplomat said. "But now the central bank is operating again, free of Gaddafi, we can have some confidence."
Diplomats warned however that the caution meant that even with the lifting of sanctions Libya may still have to wait for its missing billions.
A UN resolution in September eased sanctions on Libya's national oil company.
Fighting essentially ended in Libya when Gaddafi was killed in October and the UN Security Council authorized the release of about $18 billion to help the government. But by late November only about $3 billion of that had been made available to Tripoli because of the legal problems.
Libyan Foreign Bank was until recently more widely known as the Libyan Arab Foreign Bank. Entirely owned by the central bank it was set up to carry out transactions abroad, especially for Libya's foreign trade.
Libyan officials say the country, despite its oil wealth, desperately needs cash to pay for services and get the post-Gaddafi economy moving again.
In his letter to the Security Council, Jalil said lifting sanctions was "essential for the economic stability of Libya; for confidence in the banking sector; for the smooth execution and settlement of both domestic and international banking transactions; and to underpin the social and micro stability of the new Libya."