Military bands, 400 dancers, aerobatic planes and fireworks are set to electrify a hot and drowsy Tripoli from Tuesday as Muammar Gaddafi throws Libya's biggest party to mark four decades since taking power.

The six days of celebrations across the north African country were designed to get the message across to the world that the long-isolated oil exporter was open again for business after years of heavy sanctions, organisers said.

But controversy still stalks Gaddafi, with the United States and Britain angry at the "hero's welcome" that Tripoli gave a former Libyan agent who was freed by Scotland last month from a life sentence for the Lockerbie bombing that killed 270 people.

Abdel Basset al-Megrahi, the only person convicted of the 1988 bombing of a Pan Am airliner, was released on compassionate grounds because he is dying of cancer.

Libya has invited dozens of Western heads of state but European leaders are expected to stay away, including Italy's Silvio Berlusconi who visited Libya on Sunday to mark the first anniversary of a Libyan-Italian friendship agreement.

President Hugo Chavez of Venezuela will attend and a bevy of African leaders including Zimbabwe's Robert Mugabe and Sudan's Omar Hassan al-Bashir, are expected to be in town for an African Union summit.

"Libya is opening up to the world -- that is the basic message," said Philippe Skaff, who heads the team coordinating the centrepiece celebration event. It includes companies from France and Britain.

"This is the first time they actually received thousands of foreigners with open arms. They are granting visas for this like they've never done before," he said.

Libya has cut support for armed revolutionary groups around the world and made peace with Washington by scrapping a programme to build nuclear weapons and paying compensation for bombings and other attacks for which it was blamed by the West.

Gaddafi’s rule

At home, political parties remain banned and Gaddafi staunchly defends his system of grass roots government by town-hall committee, rejected by critics as a cloak for authoritarianism.

But foreign companies are back searching for oil or vying for contracts to build roads, railways, phone networks and schools as Libya tries to make up for lost time.

As Tripoli counts down to its six-day party, lasers beam out into the Mediterranean through the hot, humid night air from the roofs of new hotels built to cater for the influx of foreigners.

Lights adorn buildings across the city, walls in the old town have been freshly whitewashed and rows of green Libyan flags flutter over its dusty streets.

Portraits of Gaddafi adorn billboards and buildings across the city, his features sometimes traced out in colourful neon lights. Two new oil tankers loom over the corniche in a statement of Libya's growing might as an energy producer.

The organisers say hundreds of thousands are expected in the capital on Tuesday night for a three-hour show tracing Libya's history and offering a glimpse of the future. They say its scale will rival an Olympic opening ceremony.

In the following days, hot air balloons will rise over the desert and Tuaregs will hold a festival featuring 1,000 camels.

Libya's ancient coastal cities of Leptis Magna and Sabratha will come right up to date with sound and light displays.

Gaddafi has made Africa the focal point of his return to the international stage, giving generous aid to poorer African countries and campaigning for a United States of Africa with a common army and currency. – Reuters