Tony Blair has said British victims of the IRA's links with Libya were legally barred from inclusion in a US compensation deal.
Colonel Muammar Gaddafi gave arms and Semtex explosives to the republican group during the Troubles. Semtex from Libya became the IRA's most devastating threat during the Troubles and caused the loss of many lives.
The Northern Ireland Affairs Committee of MPs is considering how UK victims of the late Libyan leader's aid can be compensated. It has invited Mr Blair to give oral evidence.
The former prime minister wrote to the committee: "I was in favour of the USA having good relations with Libya for the same reason as I favoured the UK having such relations: it assisted in the fight against terrorism.
"The decision by the US not to include British victims was, I believe, because they were precluded legally from such an action."
The US-Libya Claims Settlement Agreement was signed in August 2008, after Mr Blair left office.
It was designed to provide rapid recovery of fair compensation for Americans with terrorism-related claims against Libya.
Mr Blair said: "I was not in Government at the time of the settlement and I believe the IRA victims were precluded legally from such an action in the US."
The committee is exploring options for compensating the bereaved like using the frozen assets of the Gaddafi family.
Links between the IRA and Libya date back to 1972 when Gaddafi praised the group.
He later provided the IRA with weaponry to help wage an armed conflict which lasted 30 years and claimed many lives.
The dictator was ousted from power in 2011 and later killed during an assault on his birthplace.