British Prime Minister offered a "hand of partnership" to Libyan leader Colonel Moamer Kadhafi here Thursday and said Tripoli had set an example of the Arab world working with the West after 9/11. After a landmark meeting and handshakes that came three months after Libya's decision to abandon weapons of mass destruction, Blair spoke of "real hope that we can build a new relationship with it (Tripoli), one for the modern world." He said he was struck by Kadhafi's "insistence on Libya's determination to carry on down this path of cooperation" and "his recognition that Libya's own future is best secured by a new relationship with the outside world." The Libyan leader recognised "a common cause, with us, in the fight against Al-Qaeda extremism and terrorism, which threatens not just the Western world but the Arab world also," said Blair. "In reaching out the hand of partnership today, we do not forget the past, but we do try in the light of the genuine changes happening, to move beyond it," said the first British premier to visit Libya since its 1951 independence. Libya had showed it was possible for "countries in the Arab world to work with the United States and the UK to defeat" terrorism and work for "a more secure world because of the absence of weapons of mass destruction." Blair, who met Kadhafi in a Bedouin tent on the outskirts of Tripoli, also repeatedly hailed the "remarkable progress" made by former "rogue state" Libya in mending fences with the West. "It's good to be here at last after so many months," he said at the meeting. "You did a lot of fighting on this issue," said Kadhafi, speaking in English before journalists, in apparent reference to the new warmth between Britain and Libya, which was ostracized in the West for its alleged support of terrorism. The meeting between Blair, in suit and tie, and Kadhafi, in a traditional dark brown robe and round flat cap, was held in a tent with palm and camel motifs in the green of Islam. Kadhafi, Libya's leader since 1969 and often dubbed a maverick in international relations, was bespectacled but without his customary dark sunglasses. The leaders also shared a traditional Libyan meal of fish couscous. A spokesman for the premier said, on condition of anonymity, that their views converged on several issues but they were not in full agreement. "What they agreed on is the need to unite together, to recognize the problems caused to the world by fundamentalism and what fundamentalism produces, which is terrorism and extremism," he told reporters. "What we are not pretending is that we agreed on every issue," he said. But Libyan Foreign Minister Abdelrahman Shalgham told reporters that Al-Qaeda, blamed for the September 11, 2001 anti-US attacks, posed "a real obstacle against our progress, against our security... against any change in the region." Blair's trip marked the most visible sign yet of Libya's rehabilitation after deciding in December to scrap programmes to develop banned weaponry. In London, Royal Dutch/Shell announced it signed a deal with Libya for a "long-term strategic relationship" to explore and tap the North African state's oil and gas reserves. The five-to-seven-year exploration programme is worth 200 million dollars, said Shell's head of exploration and production, Malcolm Brinded, who signed the Heads of Agreement. On the political front, Blair has faced criticism by opponents at home for going to Libya almost immediately after attending a memorial service in Madrid for the victims of the March 11 train bombings in the Spanish capital. Last year Tripoli agreed to pay compensation for the 1988 bombing of Pan Am Flight 108 over Lockerbie, Scotland, that killed 270 people and remains Europe's worst-ever terrorist atrocity. British Foreign Secretary Jack Straw said Thursday that it was "courageous" for Kadhafi to have changed his position so completely and credited this to the months of secret talks with Britain and the United States. Blair confirmed that British police are to visit Libya on April 3 to investigate the 1984 murder of a London policewoman shot dead outside the Libyan embassy. The prime minister also laid out "significant" developments in trade and military relations. Apart from the Shell deal, British Trade "Minister Minister Mike O'Brien will lead a business delegation here in April," and British aerospace and defence giant BAE Systems will also "shortly sign a major deal here," he said. Straw and Shalgham, meanwhile, will initiate a new dialogue on regional and security issues, Blair added, while a British defence coordinator is to be named to "offer Libya the chance of a new military relationship" with London. **PHOTO CAPTION*** Britain's Prime Minister Tony Blair, left, meets with Libyan leader Moammar Gadhafi in his tent outside Tripoli, in Libya, Thursday, March 25, 2004. (AP Photo /PA, Stefan Rousseau)