Kadhafi was scheduled to meet President Dmitry Medvedev at 0900 GMT and Prime Minister Vladimir Putin later at 1400 GMT, after arriving Friday on his first visit to Moscow since Cold War days in 1985.

The north African leader may sign a pact on Russian-Libyan nuclear energy cooperation, the Vedomosti newspaper reported Saturday, citing a source involved in preparations for the visit.

The source did not give details but Russia has reportedly been in talks to build a nuclear power plant in Libya.

Other expected topics include a multi-billion-dollar deal to upgrade Libya's Soviet-era arsenal and lucrative contracts for Russian firms.

Libya might also offer to host a Russian naval base at the Mediterranean port of Benghazi, the Russian newspaper Kommersant reported Friday.

"The Russian military presence will be a guarantee of non-aggression against Libya from the United States," it said.

But on Saturday Russian papers seemed more interested in the Libyan leader's unusual travel arrangements, with the Izvestia daily running the headline: "Kadhafi set up his tent in the Kremlin."

An AFP journalist saw a small fire burning in front of the khaki-coloured tent Saturday in the Kremlin's Tainitsky Garden, whose name derives from the Russian word for "secret".

The garden is named after the nearby Tainitsky Tower, built in 1485, which once contained a secret passage that let Kremlin residents escape in times of siege.

Kadhafi uses the heated tent to host guests on trips abroad and does not usually sleep in it.

The Libyan leader, a former pariah who has sought in recent years to rejoin the international fold, was greeted warmly by Medvedev on Friday at his country residence outside Moscow.

"I hope your visit will be productive.... Our countries have had friendly relations for decades," Medvedev told Kadhafi.

Kadhafi, in his trademark Bedouin robes, responded: "I hope this visit will be fruitful for our relations."

Speaking on condition of anonymity, a Kremlin source said ahead of the visit that the two would discuss "the peaceful atom" as well as "military-technical cooperation," a term that typically describes arms purchases.

Libya could buy more than two billion dollars (1.5 billion euros) of Russian arms including surface-to-air missiles, tanks and fighter planes, Interfax news agency reported Friday, citing a Russian defence industry source.

Relations have warmed this year between Russia and Libya, which began to shed its pariah status in 2003 when it renounced weapons of mass destruction and took responsibility for a 1988 airliner bombing over Lockerbie, Scotland that killed 270 people.

In April, during a visit to Tripoli by then-president Putin, Moscow agreed to cancel billions of dollars of Libyan Soviet-era debt in exchange for big contracts with Russian companies.

According to Libyan sources in Moscow, Kadhafi is expected to visit Ukraine and Belarus after his visit to Russia.