SIRTE, Libya, March 27 (Xinhua) -- Libya has lifted a ban on visas for citizens of the Schengen zone, the Foreign Ministry announced Saturday.

"In the interests of strengthening its cooperation with the European Union, Libya lifts the restrictions it earlier imposed on the citizens of the Schengen zone," the Foreign Ministry said in a statement carried by the official JANA news agency.

The Libyan move came after the EU announced earlier Saturday to remove all the names of Libyan citizens from a blacklist, which banned them from entering the Schengen zone, a borderless travel zone comprised of 22 EU states plus Switzerland, Norway and Iceland.

The blacklist, initiated by Switzerland in July 2008 following a diplomatic row involving Libyan leader Muammar Gaddafi's son, prevents 188 Libyan citizens, including Gaddafi and his family members, from entering any of the Schengen states.

The EU had been pushing for a diplomatic drive to resolve the issue, which threatens to damage its growing business ties with Libya, an oil exporter.

"All the names of the Libyan citizens included in the list of the Schengen information system have been removed," the Spanish Foreign Ministry said in a statement Saturday, shortly after Foreign Minister Miguel Angel Moratinos arrived in the Libyan town of Sirte, where Gaddafi is hosting a summit of the Arab League.

Spain is holder of the rotating EU presidency in the first half of 2010.

"We regret and deplore the trouble and inconvenience caused to those Libyan citizens. We hope that this move will not be repeated in the future," said the EU presidency statement.

In July 2008, Swiss police arrested Hannibal Gaddafi, a son of the Libyan leader, on charges of mistreating two domestic employees. Libya retaliated by stopping oil exports to Switzerland and withdrawing savings from Swiss banks. Gaddafi, the leader, urged jihad against Switzerland.

Though the charges were later dropped and Hannibal was released, the two sides had been locked in a diplomatic dispute.