(Updates with Ferrero-Waldner, Gaddafi telephone call)

By Anna Mudeva

SOFIA, July 18 (Reuters) - Bulgaria and the European Union called on Libya on Wednesday to transfer six foreign medics to Sofia, after Tripoli lifted their death sentences for infecting hundreds of children with the HIV virus.

The five Bulgarian nurses and the Palestinian doctor, who have spent more than eight years in jail, could be pardoned by the Balkan country's president if they are sent to Sofia under a 1984 prisoner exchange agreement with Libya.

Following hectic diplomatic talks and payment of hundreds of millions of dollars to the families of 460 HIV victims, Tripoli commuted the death sentences against the six to life imprisonment late on Tuesday, paving the way for their release.

EU newcomer Bulgaria and its allies in Washington and Brussels, who say the medics are innocent and have pushed for their release, reacted with relief to the Tripoli ruling but cautioned it was not the end to the eight-year ordeal.

"I am calling for calmness and a little bit more patience, Prime Minister Sergei Stanishev said. "We are taking and will be taking all steps to bring this whole case to an end as soon as possible and see our compatriots very soon on Bulgarian soil."

Chief Prosecutor Boris Velchev said he would send Libya a request for the medics' transfer by the end of the day, but his office later said the papers will be shipped by Friday.

The EU, which took part in negotiating the compensation deal with the HIV victims' families, said it had hoped for clemency but would now focus on helping to send the medics to Bulgaria.

"We hope now that the legal proceedings can start immediately for the transfer of the nurses and the medics back to Europe," EU Commissioner for External Relations Benita Ferrero-Waldner told Reuters.

The Libyan state news agency Jana later reported that Ferrero-Waldner had spoken by telephone with Gaddafi.

The agency did not say whether they had discussed the fate of the medics.

The six were sentenced to death last year after being convicted of intentionally starting an HIV epidemic at a children's hospital in the Mediterranean port city of Benghazi.

The medics say they are innocent and confessions central to their case were extracted under torture.

In what is seen as a further step to their release, a Libyan court on Wednesday dismissed defamation charges against the medics by a police officer who they had accused of torture.

DIPLOMATIC ISOLATION

Sofia's Western allies have suggested that not freeing the nurses would hurt Libyan leader Muammar Gaddafi's efforts to emerge from decades of diplomatic isolation, a process he began by scrapping a prohibited weapons programme in 2003.

Portuguese Foreign Minister Luis Amado, whose country holds the EU presidency, said a quick response to the medics' case from Tripoli could significantly improve ties with the bloc.

French President Nicolas Sarkozy, who has pledged to make the medics' case a foreign policy priority, could visit Gaddafi very soon if this helped to speed their release, a presidential spokesman said in Paris.

According to an Internet Web site run by the official Libyan news agency Jana, Sarkozy told Gaddafi in a phone call on Tuesday Libya would be the first stop on his trip to Africa next week.

A spokesman for the French leader would not be drawn on a precise date for any Libya visit.

In Bulgaria, where people wear ribbons saying "You are not alone" in a campaign to support the medics, reactions to the Tuesday ruling ranged from relief to disappointment.

"I expected the nurses to be pardoned and fully acquitted, because I am sure they are innocent. The Libyans took all they could, I feel really sad about our nurses," said theatre director Katya Popova, 50.

But the victims' families, who received $1 million each, have said the case was part of a Western attempt to undermine Muslims and Libya. Fifty-six of the children have died, arousing widespread anger.

A spokesman for the Libyan children's families, Idriss Lagha, said the funds for the financial settlement had come from the Benghazi International Fund, which had been financed by the European Union, the United States, Bulgaria and Libya.

The EU denies having paid cash, saying it has only provided long term medical care and hospital support.

Foreign HIV experts testified during the case in Libya that the infections started before the six arrived at the hospital and were more likely to be the result of poor hygiene.

Last month, Bulgaria granted citizenship to the Palestinian doctor to help bring him out of Libya if the death penalties were commuted. (Additional reporting by Tsvetelia Ilieva and Kremena Miteva in Sofia, Darren Ennis in Brussels, Carlos Pontes in Lisbon, Emmanuel Jarry in Paris and Salah Sarrar in Tripoli)

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