A special representative has been appointed to help secure compensation for IRA victims killed with Semtex supplied by former Libyan leader Colonel Muammar Gaddafi.
Former chairman of the Charity Commission, William Shawcross, has been appointed by the British government to help victims obtain redress from the Libyan government.
Assets held by Libya have been frozen by the United Nations Security Council.
It is understood Mr Shawcross will look at the legal position between the UK, Libya and the UN, how much compensation is needed and how many people may receive it.
In October 2008, Libya paid $1.5 billion into a fund to compensate relatives of the 1988 Lockerbie bombing victims; American victims of the 1986 Berlin disco bombing; American victims of the 1989 UTA Flight 772 bombing and Libyan victims of the 1986 US bombing of Tripoli and Benghazi.
DUP MP Emma Little-Pengelly said Libya must recognise the role it played in IRA violence.
"PIRA victims across the United Kingdom have a very worthy and compelling case," she said.
"They were et down by previous governments. It is critical that we continue to press this case.
"I am glad this is another step in the right direction."
Middle East Minister Alistair Burt said the move will bring victims a step closer to securing compensation.
"As the Foreign Secretary’s Special Representative on UK victims of Gaddafi-sponsored IRA terrorism, Mr Shawcross’s role will be to help inform the government’s approach to this issue," he said.
"The precise terms of reference are being finalised, but among the issues Mr Shawcross will advise on is the amount of compensation that should be sought."
Mr Shawcross said he was "honoured" by the appointment.
"The victims of the IRA terrorism sponsored by Gaddafi deserve all support for their efforts to obtain redress from the Libyan government," he said.
