Following the fall of the Gaddafi regime, a Metropolitan Police team will travel to the Libyan capital within weeks in the hope of securing a breakthrough in the 28-year-old case.
The announcement came following a meeting between David Cameron and Libya's interim Prime Minister Abdurrahim El-Keib in Downing Street yesterday.
Mr Cameron hailed the agreement as a "really positive step forward" for the inquiry into the death of WPc Fletcher, who was gunned down as she policed a protest outside the Libyan embassy in central London.
"I am delighted that we are working closely together on the issues of mutual interest including having a Metropolitan Police team going to Libya to continue the investigation into the murder of WPc Yvonne Fletcher," the Prime Minister said.
