Switzerland is prepared to lift a travel ban on some Libyan citizens, the government said on Thursday, as it works to secure the release of Swiss businessman Max Goeldi from a Libyan jail.

The offer was made within mediation efforts by the European Union to help Switzerland and Libya resolve a row threatening EU energy interests after Libya barred entry to travellers from the Schengen area, a border-free zone encompassing most of western Europe.

Switzerland, which has drawn up a blacklist of Libyan citizens it will not allow to cross its borders, said Tripoli should also lift its travel restrictions.

"The government is prepared, within the framework of the European Union mediation, to lift the ban on certain categories of Libyan citizens," the Swiss government said in a statement. "It expects Libya to lift its travel ban for citizens from the Schengen area."

Swiss government spokesman Andre Simonazzi said the statement encompassed all the categories on the Swiss blacklist, but did not clarify whether Switzerland would only lift its travel ban if Libya took similar measures.

"It is up to you to interpret the statement," he said.

EU foreign policy chief Catherine Ashton said after a meeting with her Swiss counterpart Micheline Calmy-Rey in Brussels that she welcomed Switzerland's "commitment to find a diplomatic solution as shown by their readiness to withdraw the black list of Libyan officials."

"The EU expects that the Libyan authorities will react in a positive way and lift the restrictive measures on EU citizens," Ashton said in a statement.

Libya's dispute with Switzerland began in July 2008 when police in Geneva arrested Libyan leader Muammar Gaddafi's son Hannibal on charges, later dropped, of mistreating two domestic employees.

Gaddafi's son was released shortly after his arrest, but Libya cut oil supplies to Switzerland, withdrew billions of dollars from Swiss bank accounts and arrested two Swiss businessmen working in the North African country.

One businessman has been released but the other, Goeldi, is serving a four-month prison sentence.

"Switzerland's goal remains Max Goeldi's release. In order to achieve this, the government is prepared to continue negotiations on the basis of proposals by the two European mediators," the Swiss government said.

Libya says the Geneva arrest and the case of the two businessmen are not linked.

Reuters