The British Foreign and Commonwealth Office notified The Guardian newspaper it received a settlement offer from al-Watan Party leader Abdel Hakim Belhaj.
"(London) is cooperating fully with investigations into allegations made by former Libyan detainees about U.K. involvement in their mistreatment by the (former) regime," the letter stated. "A police investigation is under way so we are unable to comment further."
Belhaj, who worked with NATO forces during Operation Unified Protector, claimed London played a role in his illegal rendition and torture while he was held in Libya's Abu Salim jail.
He was captured in Thailand in 2006 and sent to the Libyan prison. There, he says, he was tortured by Western and Libyan personnel because he was accused of supporting al-Qaida.
He said he'd settle with the government of Prime Minister David Cameron for a few dollars provided he received a public apology. He added that he was grateful for the role British forces playing during NATO operations that ended with the death of former leader Moammar Gadhafi.
Belhaj said he was bringing his claim "to secure a public judgment."