French Defence Minister Herve Morin confirmed Friday that a letter of intent had been signed for the sale of Milan anti-tank missiles and a radio communications system worth, according to a Libyan official, 296 million euros (405 million dollars).

News of the deal was set to spark controversy, coming the week after French President Nicolas Sarkozy and his wife Cecilia played a key role in brokering the release of six foreign medics sentenced to life imprisonment in Libya.

The five Bulgarian nurses and Palestinian doctor were flown home last week after an eight-year incarceration on charges of deliberately infecting hundreds of Libyan children with the AIDS virus.

Sarkozy, who travelled to Tripoli a day after they were freed, presented their release as a success of French and European diplomacy and has denied any link to an arms deal.

Morin said the missile accord was "an agreement between a company and a country," which had been in the negotiating pipeline for months.

But Libyan officials have sought to cast it as a state-to-state deal with France, marking Tripoli's return to the international fold. France owns 15 percent of EADS -- the largest public stake in the consortium.

Libyan leader Muammer Gaddafi's son, Saif ul-Islam Gaddafi, said in an interview published Wednesday in France that resolution of the medics' case had paved the way for the signing of major arms contracts.

During Sarkozy's visit, France and Libya signed a memorandum pledging to cooperate on nuclear energy projects, and a military agreement whose contents were not made public.

Emerging details of the arms accord have sparked an uproar in France where the leader of the opposition Socialist Party, Francois Hollande, called for a parliamentary enquiry to decide if the government behaved inappropriately.

"If there was no exchange, if there was no bartering, why sign a military agreement with the Gaddafi regime, which has been responsible for terrorist acts, which has been a rogue state?" he asked.

"How can we accept that in a democracy Nicolas Sarkozy wants to be transparent it should be Gaddafi's son who informs us of the signature of an arms contract, when the foreign minister knows nothing of it and the defence minister is still talking of a 'letter of intent'?" Hollande said.

France's defence minister said the missile sale to Libya had been approved by the government of Sarkozy's predecessor Jacques Chirac.

"When you have been in talks for months and months, when a French interministerial committee says, in February 2007, 'we agree to this sale', then it is logical for the deal to go ahead," Morin said.

The Libyan purchases were agreed with subsidiaries of EADS, which is controlled by French and German public and private interests, and of Britain's BAE Systems.