In a drab tent in the stony Saharan desert, Tony Blair renewed his unlikely alliance with Colonel Muammar Gaddafi yesterday, and dangled the prospect of selling weapons to his former enemy.

The Prime Minister was driven in a convoy of cars, police motorcycles and two battered buses to a barren spot of desert near Sirte, close to where the Libyan leader grew up.

On arriving at an encampment buffeted by a blustery wind, he was ushered into a large canvas tent. Seated on a gilt armchair was his host: the man once dubbed the “Mad Dog” and whom Mr Blair helped to bring in from the cold.

Colonel Gaddafi, wearing brown robes and a black cap, smiled as the British press were shoved out by suited Libyan officials as soon as the two leaders had shaken hands.

The pair were left in the tent, held up by guy ropes tied to breeze blocks. The walls were decorated with a pattern of camels and date palms. The tent’s only other concession to luxury was its carpets over the rough desert floor.

Colonel Gaddafi flicked his fly whisk over his shoulder occasionally or pointed at the ceiling as the pair made small talk. Mr Blair, in a dark blue suit, white shirt and red tie, sat facing him with his hands on his knees, grinning.

Only a Libyan translator and Sir Nigel Shinewald, the Prime Minister’s foreign policy adviser, joined them as they settled down to discuss co-operation on counter-terrorism, British help for Libya’s legal system and co-operation on defence and commercial ties, including BP’s resumption of operations in Libya after 30 years.

The chairman of Libya’s state-owned National Oil Corporation said that BP had won a gas-exploration deal worth $900 million (£450 million). After 105 minutes of talks Colonel Gaddafi — now wearing large, yellow-rimmed sunglasses — walked Mr Blair out to the crossroads next to which his tent was pitched and they shook hands again.

Mr Blair described their discussions as “positive”. He said: “A few years back, Britain and Libya would never have had this relationship. Now, all of that has changed and it is a change for the benefit of Libya and the benefit of Britain and the wider region.”

The Libyan Prime Minister, Al-Baghdadi Ali al-Mahmoud, announced later that his country would buy missiles and air defence systems under a new agreement. British officials insisted that no such deal had yet been reached.

On his flight from London to Tripoli Mr Blair described his unlikely relationship with the Libyan leader, once regarded as an international pariah for his alleged support of terrorism, including the Lockerbie bombing in 1988. He said that they spoke by telephone several times a year, were on first-name terms and got on “pretty well”.

Mr Blair told reporters: “I find him very easy to deal with. To be fair to him there is nothing I have ever agreed with him should be done that hasn’t happened. And that’s important. Some of these things have been difficult for Libya as well.”

Asked if Britain’s transformed relationship with Libya held a lesson for Iran’s relations with the West, Mr Blair said: “I think it is always possible for relationships to change, but they change ultimately on the basis of actions.

“In respect of Iran I’ve got no doubt at all that the situation is the same in this sense that the potential for partnership is always there provided the actions are the actions of partners,” Mr Blair said in some of his most conciliatory remarks about Tehran.

Britain played a leading role in talks that led to Libya giving up its chemical, biological and nascent nuclear programme in late 2003, months after the invasion of Iraq. Tripoli returned to the international fold after it abandoned efforts to acquire nuclear weapons and agreed to pay damages for the Lockerbie bombing.

Mr Blair said that this justified a new relationship with Libya. “What Libya shows is that it is possible to go from a situation where Libya was an outcast in the international community to one in which the relationship is transformed and changed.”

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