A leading figure in the occupation of the �10million Gaddafi mansion in Hampstead Garden Suburb is working on proposals to use it as a bargaining chip for the return of Jewish assets frozen in Libya.

Political forecaster Dr Saul Zadka is lobbying the government to consider holding onto Libyan assets until an agreement is reached to hand back Jewish assets seized when Muammar Gaddafi came to power.

Dr Zadka, a freelance journalist, claims an MP has agreed to take up the cause and air the issue in parliament.

The Treasury seized all assets linked to the Gaddafis in February, including the multi-million pound retreat in Winnington Close.

Dr Zadka, who organised the original storming of the mansion earlier this year, said: “This house should not be unfrozen until the new government in Libya will address the past when Gaddafi confiscated Jewish properties in Libya.

“Jews at that time were oppressed and murdered and this property and other assets can be used to broker a deal for compensation.”

The property was initially occupied by English, Australian and French squatters earlier this year.

But it was later taken over by Libyan nationals who have since taken down protest banners and signs supporting the National Transitional Council.

Complex ownership structures have stalled any attempt to evict the squatters.

The Hampstead Garden Suburb house is owned by Capitana Seas Ltd, based in the British Virgin Isles, but the “beneficiary owner” of the house has been identified by the Treasury as Gaddafi’s third son Saadi Gaddafi.

Lawyer Mohamed Shaban, who is acting on behalf of the Libyan ambassador in London, said there has been little progress in tracking down the offshore company, making it difficult to seize the property.

One squatter, who did not wish to be named, told the Ham&High he wanted to see the home given back to newly-liberated Libya.

He said: “I would like it to be handed to the Libyan ambassador or it could be given to a Libyan property company here.”