Tony Blair has failed to respond to claims he was part of £1billion terror deal negotiations between America and Libya.

According to The Telegraph , the former Prime Minister made a secret trip to America to broker a deal on behalf of late dictator Muammar Gaddafi resulting in British victims of Libyan and Libyan-sponsored terrorism being denied millions of pounds in compensation.

Mr Blair had been asked to submit evidence by Friday, October 23, to MPs over the allegations.

But he failed to reply in time, instead sending a letter at 6pm on the deadline day asking when the deadline was.

According to a “senior source” Mr Blair, who had quit as Prime Minister a year before, helped in negotiations between Gaddafi and President George Bush over payments to terror victims.

The deal led to American victims receiving about £1billion while British victims received nothing.

This included those hurt in the 1996 Docklands bomb .

The source said: “There was no deliberate plan to exclude Britons from the deal but that was a consequence. It was certainly the effect.

“The Libyans had taken fright at the number of court judgments and that led to the negotiations and the setting up of the US compensation fund. It’s regrettable that the US didn’t allow British citizens to make a claim on the fund.”

Mr Blair has been called to give evidence to the Northern Ireland Select Committee , which is looking into the UK Government’s role in seeking funds for Libyan-sponsored terrorist attacks, including the Docklands bombing.

The committee is particularly interested in why Mr Blair was part of the discussions between Mr Bush and Gaddafi.

Kate Hoey, a Labour MP and committee member, said: “The more we hear from witnesses, the more Tony Blair’s name crops up.

“It is extremely likely our committee will wish to interview him and see him in person.”

Mr Blair has always insisted he had 'nothing whatever to do with any compensation legislation signed by President Bush'.

“Did Mr Blair advise the Government what he was doing? This vital query makes it all the more necessary for Mr Blair to give full account to the committee of his involvement and what actually went on.”

Mr Blair’s spokeswoman said he had no involvement with the terms of compensation or any discussion with George Bush on the matter.