Intense last-minute talks in closed session looked set to give French families until the weekend to conclude protracted negotiations with the Libyan government over increased payments for the victims in the 1989 bombing of a UTA airliner which exploded over sub-Saharan Africa.

"The mood around the table is that everyone wants to lift sanctions but not to have a vetoed resolution just for the sake of it," a Security Council source close to the talks said last night. "The question is if you give the French more time will that make any difference or will be just in the same place further down the road? There was a feeling that a time limit might be helpful to push the talks with the French families forward."

Earlier in the day the situation had been deadlocked after France said it would oppose a resolution to lift sanctions unless agreement was reached on compensation for the families. A negotiator for the French said an agreement was close and negotiations with Libya were continuing by fax and phone.

The French government asked Britain to delay the vote until an agreement could be reached. The French foreign minister, Dominique de Villepin, told his British counterpart, Jack Straw, that "France would have no other choice but to oppose the resolution" if a vote is held "in the absence of an equitable agreement".

But a spokesman for Tony Blair said Britain, which assumed the rotating presidency of the Security Council this month, would push ahead with the vote. "Clearly it is a dynamic situation, but it is still our intention to call a vote today," he said.

But while there was some impatience with the French, other council members felt it would be better to give the French more time if that resolved the issue.

"Everyone agrees to have resolution rather than failed resolution," a British diplomat said.

A range of deadlines was mentioned but the most likely day is Friday, according to Security Council sources.

The UN imposed the sanctions following the 1988 bombing of the Pan Am jet which crashed over Lockerbie in Scotland.

Libya agreed to a $2.7bn (£1.7bn) compensation deal last month for the families of the 270 Lockerbie victims, thereby paving the way for the lifting of sanctions. The deal will give each victim's family between $5m and $10m (£3.1m and £6.2m). The settlement embarrassed France which had settled for little more than $30m (£19m) to be shared by all the 170 victims' families in the UTA case. When the French families heard of the Lockerbie settlement they and Paris demanded more money.

Libya declared last month that a deal offering greater compensation had been reached, but the France parties have yet to accept it formally.

As the negotiations continued, 53 families of victims in the Lockerbie crash sat patiently in the Security Council gallery, waiting for diplomats to appear and vote.

The UN sanctions, including an air and arms embargo and a ban on some oil equipment and financial assets, were imposed in 1992 and 1994 and suspended in 1999 after Libya turned over two suspects for trial for the Lockerbie bombing.

Although Libya has never admitted responsibility for blowing up the UTA flight it paid a total of $34m to France after a Paris court convicted six Libyans in absentia for the attack.

Washington, which is expected to abstain on the resolution for domestic political reasons, has vowed to keep in force separate US sanctions including a ban on Libyan oil sales to the United States.