Libyan central bank Italian Prime Minister Mario Monti announced that Italy will unfreeze Lybian funds and that it will renew the 2008 “friendship deal” after meeting Libya's Mustafa Abdul Jalil in Rome .
Some 600m euros ($780m; £508m) in assets have already been released.
Mr Jalil, who also met President Giorgio Napolitano, pledged to use the unfrozen funds to pay debts to Italian companies.
Italian oil giant ENI, partially state-owned, had reached 70 per cent of its pre-conflict output capacity in Libya, Mr Jalil said.
Under the 2008 treaty, ENI is to pay 15bn euro to build a super highway crossing the north African desert coastline, linking Libya with its neighbours Tunisia and Egypt.
In exchange, the oil firm secured important oil exploration concessions.
France is ready to do the same by releasing $300 million to Libya's new rulers in order to help them recover the rest of their frozen assets. The announcement was made by the French foreign minister Alain Juppe during a short visit to the Libyan capital, Tripoli on Wednesday.
Almost two months after declaring Libya liberated from the dictatorial regime of slain Libyan despot Muammar Gaddafi, who was overthrown during an eight-month long conflict, Libya's interim leaders have still only recovered only about $3 billion, which is a fraction of the amount of $150 billion of frozen assets.
Libya needs the money is needed to pay for workers' wages and embark on plans to rebuild the country ravaged by the armed conflict.
Juppe, who had earlier had talks with Libya's interim prime minister Abdurrahim El-Keeb, told a news conference: "We are sure that the frozen amount belongs to the Libyan people. France will release 230 million euro in the next few days and we are going to work with our partners in the Security Council to unfreeze the (remaining) Libyan assets."
Meanwhile, Libya's central bank and a subsidiary are expected to have UN sanctions against them lifted on Friday in a move to ease a cash crunch since the country's civil war ended, diplomats said on Wednesday.
They said the Central Bank of Libya and the Libyan Foreign Bank (LFB), an offshore institution wholly owned by the central bank, would be taken off the Security Council's sanctions list unless there were objections from council members.
When a rebellion broke out in February against Gaddafi, the Security Council froze Libyan assets abroad estimated at $150 billion, but the bulk of that sum remains beyond the reach of the oil-rich country's new rulers.
Gaddafi's 42-year rule ended when his forces fled Tripoli in August, and the last of the fighting in Libya ended in October when he was captured and killed by rebels.
Yet by late November only about $18 billion in seized assets had been released by special provisions of the Security Council's Libya sanctions committee, and diplomats said only about $3 billion of that had been made available to Tripoli.
The freezing of Libyan assets was part of a package of sanctions intended to put pressure on Gaddafi's administration to stop attacking civilian protesters.
Diplomats said the sanctions committee chairman, Portuguese Ambassador Jose Filipe Moraes Cabral, had circulated the Libyan letter to the council's 15 member states.
In a covering letter he said that under a so-called "silence procedure" the central bank and the LFB would be automatically delisted at 5pm New York time (2200 GMT) on Friday unless there were prior objections from any member.
Diplomats said they were unaware of any objections as of Wednesday morning. "I think it won't be a controversial issue," one diplomat said.