Among the 270 people who died in the bombing were 189 Americans. The decision angered families of the US victims, and Obama Thursday called it a 'mistake', urging Libya to hold him in house arrest.

Gibbs would not say whether the airport greeting would harm US-Libyan relations, which have been on the mend in recent years. 'We'll continue to ... watch the actions of this individual and the Libyan government.'

US-Libyan relations have been thawing after decades of estrangement. The US began resuming formal diplomatic ties with Moamer Gaddafi's government in 2004 after it agreed to compensate the families of the Pan Am victims and abandon weapons of mass destruction programmes.

In 2008, then US secretary of state Condoleezza Rice made a historic trip to Libya.