As the hearing opened, relatives of the victims rallied outside the Tripoli courtroom, holding up pictures of their infected children, many of whom have died.

Libya's supreme court is expected to uphold the death penalty against the five Bulgarian nurses and a Palestinian doctor, but the verdict is expected to pave the way for a compensation package and for the sentences to be commuted.

However, a verdict was not expected on Wednesday.

Libyan leader Moamer Kadhafi's son, Seif al-Islam, has said he expected compensation for the infected childrens' families to be worked out between the Bulgarian government and the European Union.

"Immediately after the verdict, we will begin to work... on a package (of measures) with a view to a solution," Islam told Italy's Corriere della Sera newspaper.

Libyan sources close to the case said provided the package was agreed, a final decision on the medics' fate could be reached by the end of the week.

Libya's highest court has the authority to commute the death sentences to prison terms that could be served in Bulgaria which has an extradition treaty with Tripoli, a Libyan lawyer explained on condition of anonymity.

The medics were first arrested in February 1999 and were sentenced to death in May 2004 after being convicted of infecting 438 children with HIV-tainted blood at a hospital in the Mediterranean city of Benghazi.

Fifty-six children have since died.

The accused have denied the charges and foreign health experts have said the AIDS epidemic in Benghazi, Libya's second city, was probably the result of poor hygiene.

The case has sparked mounting criticism from the European Union and the United States and hindered Libya's efforts at rapprochment with the West after Kadhafi's regime renounced efforts to develop weapons of mass destruction in December 2003.

US President George W. Bush appealed for the release of the medics last week during a visit to Bulgaria. "We will continue to make clear to Libya that the release of these nurses is a higher priority" for Bulgaria, Bush said.

A date for the final appeal hearing was only decided after senior EU diplomats including External Relations Commissioner Benita Ferrero-Waldner visited Libya earlier this month.