"Libya will benefit from its strengthened relations with Italy. Italy will be have priority in oil and gas and other investments beacuse it is a friendly state," said Gaddafi, addressing his supporters on the 39th anniversary of the army coup that brought him to power.
Gaddafi’s speech was broadcast live on Libyan state television.
Italy has had difficult relations with Gaddafi since he took power in 1969. He expelled Italian residents and confiscated their property in 1970.
But Rome backed Tripoli’s drive to mend fences with the West, which have improved dramatically since 2003 when Libya accepted responsibility for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.
Libya has also said it will stop pursuing nuclear, chemical or biological weapons.
Gaddafi said the deal with Italy set a precedent in international relations.
"No one believed that a day would come when a colonial state apologises, expresses regret and pays compensation for its colonisation," he said.
Comparing Tripoli’s newly strengthened ties with Italy with thawing relations with the United States, Gaddafi said:
"We are not ambitious to be friends with the United States. We just want them to leave us alone and we leave them alone."
On August 14 Libya signed a deal with the United States to settle claims for compensation against each other for bombings.
U.S. victims covered include those who died in the Lockerbie bombing, which killed 270 people, and the 1986 attack on a Berlin disco that killed three people and wounded 229.
It also covers Libyans killed in 1986 when U.S. planes bombed Tripoli and Benghazi. Forty people died.
Gaddafi praised Qatar and the United Arab Emirates in playing a role in reaching the deal with Washington.
"The truth that the great help came from small Arab countries, which are Qatar and United Arab Emirates," he said, without giving details. Reuters