The extraordinary steps taken by the Iraqi leader to provide an exit strategy for key relatives and associates, which includes paying $3.5 billion (£2.3 billion) into Libyan banks, provide the first evidence that Saddam is now facing up to the prospect of being toppled from power.

Even as he makes public statements of defiance and vows to defend his country against an American invasion, The Times has learnt that Saddam’s secret emissaries have been visiting Libya and Syria to ensure that there is an escape route for his family and top cronies.

The deal with Tripoli does not include providing refuge for Saddam or for Uday, his eldest son. If either were to seek political asylum in Libya, Colonel Muammar Gaddafi would come under intense international pressure, particularly from Washington, to hand them over for war crimes.

Word of Saddam’s deal with the Libyan leader has emerged from diplomatic sources in Tripoli following a visit to the Libyan capital on September 8 by General Ali Hasan al-Majid, a cousin and trusted member of Saddam’s clan.

General al-Majid is known by the Kurds of northern Iraq as “Chemical Ali” because he was in charge of the Iraqi forces which launched a chemical weapons attack on the Kurdish town of Halabja in 1988. He was also initially the “Governor” of Kuwait after Iraq’s invasion of the Gulf state in August 1990, and is now one of the Baath Party regional command leaders. He is believed to have travelled to Tripoli to deliver a personal missive from Saddam to the Libyan leader, confirming the arrangements for his family.

The sources said that in return for the $3.5 billion deposited in Libyan bank accounts, Colonel Gaddafi has agreed to give sanctuary to members of Saddam’s family and to about a dozen senior officials of the Baghdad regime, with their families.

The sources said they believed the regime members would include Tariq Aziz, the Iraqi Deputy Prime Minister, Naji Sabri, the Foreign Minister, and Izzat Ibrahim al-Duri, deputy chairman of the Revolutionary Command Council. The other officials were believed to be less well known members of the ruling Baath Party’s regional command.

In a separate arrangement, said to have been agreed in October during a visit by senior Iraqi officials to Damascus, an overland escape route was devised. It would involve Saddam’s family members and regime leaders travelling from Tikrit, home of the Saddam clan, to the Syrian border via the Badiyat al-Sham desert which divides Syria from Iraq.

It is not clear whether the sanctuary deal includes Qusay Hussein, the Iraqi leader’s second — and favourite — son.

However, the diplomatic sources said that if Saddam felt his regime was about to collapse, he would do his utmost to see that his family escaped, especially Qusay, as well as Ali, his youngest son, and his grandchildren.

Western intelligence services assume that Saddam will stay “to the bitter end” if Iraq is attacked by a US-led coalition. Two months ago, Abbas Khalaf, Iraq’s Ambassador to Moscow, denied that Saddam would ever abandon his country in time of need. This followed reports in France that Uday Hussein had gone to Moscow to seek a future refuge for him and his father.

Intelligence sources said yesterday that the French reports were not credible. But they confirmed that the evidence of a deal for Saddam’s family to go to Libya fitted in with information gleaned in recent weeks.

The intelligence sources said that individual members of Baghdad’s Baath Party were known to be looking for potential “boltholes” in North African countries. They said that Libya made sense as a place to seek sanctuary, because many of the countries in North Africa were friendly to the West and would probably hand over wanted members of the Iraqi regime.