The report comes hot on the heels of a key visit to Russia by Libya's defense minister, Gen. Abu-Bakr Yunis Jaber. The visit signals the latest show of renewed cooperation between Russia and the once pariah state of North Africa.
"Libya is ready to buy around 20 fighter planes, at least two divisions of S-300PMU2 air defense systems and several dozen T-90S tanks from Russia, and also to modernize more than 70 tanks and other weapons," Interfax reported citing unidentified military sources.
Officials on both sides have refused to openly concede the deal, which local media, including the reputable Vedomosti newspaper, put the contract at $2 billion.
The same newspaper reported that the deal would also include purchase of the sophisticated S-300 surface-to-air anti-missile systems, which Russia has also delivered to Iran.
Another part of the deal would focus on securing combat aircraft such as the SU-35, SU-30 and Yak-130. That purchase alone would absorb half of the funds Libya is set to allocate for its Russian arms design, the Interfax news agency said.
Relations between Russia and Libya have warmed in recent years following the latter's bid to shed its pariah status in 2003 when it renounced weapons of mass destruction and took responsibility for a 1988 airliner bombing over Lockerbie, Scotland that killed 270 people.
In 2008, also, during a visit to Tripoli by President Putin, Moscow agreed to cancel billions of dollars of Libyan Soviet-era debt in exchange for big contracts for Russian companies.
It was Putin's first visit to Tripoli since the 1980s.
It remained unclear whether the new, lucrative arms contract was signed during Jaber's Russia visit.
"We expect his visit will not just be of a political nature, but will also allow the signing of contracts on the delivery of arms and military hardware," Vyacheslav Dzirkaln, deputy head of the Federal Service for Military-Technical Cooperation, told the RIA-Novosti state news agency ahead of Jaber's visit.
The official, who oversees arms exports, did not elaborate. There was, also, no official confirmation or statement by Russia's powerful state-run arms exporter Rosoboronexport.
Local media suggested that details of the contract could be revealed during a news conference on Wednesday.
The arrival of the senior Libyan minister comes days after the Libyan Investment Authority snatched up the Hong Kong initial public offering of UC Rusal, the world's biggest aluminum producer.
In 2008 UC Rusal had signed a memorandum of understanding to create a joint venture to build an "energy and metals complex" in Libya.