Updated 4pm with family reaction

Prime Minister Joseph Muscat said he is willing to drop libel proceedings against Daphne Caruana Galizia if the late journalist’s heirs accepted the conclusions of the Egrant inquiry.

Testifying in court in a libel suit he had filed against Ms Caruana Galizia, the Prime Minister said he rarely filed libels because he accepted that in his position he was  subject to criticism.

"But in this case the lie was so large, involving my wife and family, that the political stability of the country were being affected.”

Describing the allegations as a “massive lie”, he explained that he had immediately gone to the magistrate and asked for an inquiry.

“I was frustrated that it took so long but the magistrate made a thorough job, speaking to hundreds,” adding that whoever did not “accept the results of the magistrate’s decision did not want to accept the truth.

Read: The Egrant saga so far

“I expect and demand a clear declaration from the other party that they were wrong, I am ready to drop the libel cases,” the PM continued.

In view of this declaration, the Prime Minister’s lawyer Pawlu Lia asked the respondents, to make their position clear.

Dr Joseph Zammit Maempel, assisting the Caruana Galizia family, rebutted that the PM was basing himself on a report that nobody had seen, prompting Dr Muscat to state that he was basing himself “on the conclusion of the inquiry which is public. The magistrate gave no hint of doubt.”

At this point, magistrate Francesco Depasquale asked Dr Zammit Maempel whether he needed time to regulate his position, with the lawyer replying he would have to consult his clients.

Someone targeted us specifically and in a cowardly manner

“My position is clear and emerges from what other people are saying. There is nothing to these allegations. 477 witnesses were spoken to, several rogatory letters were sent to foreign countries. Several details were incorrect especially were given by (former Pilatus Bank employee) Maria Efimova. None of the documents quoted were found to exist. They are false documents made by someone who is not identified yet and this was confirmed by several foreign experts.

Read: 'I was always hoping that the libel cases would be withdrawn' - Peter Caruana Galizia says

“It was a moment of great crisis. The country was on the brink of instability. This thing will hound me, because whenever someone googles my name or my wife’s name this will come up. This is why I’m filing this libel.”

Quoting from the conclusions of the inquiry he recalled that there were numerous contradictions between testimony given by Ms Caruana Galizia and Ms Efimova.

“Personally, I have no idea if Caruana Galizia came up with these allegations herself or was fed them by someone else or something else. I’m not going to speculate. The fact is that she made them her own, I don’t know if she checked them,” adding that all legal advice had been not to publish the inquiry.

“I am not a lawyer but I understand that if someone invents a story to get someone in trouble it is a criminal act. I don’t know who did it yet, what I know is that the victims are myself and my wife. Someone targeted us specifically and in a cowardly manner.

“I’m not hunting for the person responsible but I will be content if it is accepted that it was a lie.”

Quoting at length from the inquiry conclusion, he said “I’m sorry that I’m being emotional but this affected my life. Politics require a thick skin but I’ve been in frontline politics for a long time and have only filed another two libels.

“Were I to go through the blog and sue for every libelous thing I could set up camp in this courtroom,” the Prime Minister said adding: “My level of tolerance is very high but this is unacceptable.”

“Honestly, I cannot understand a situation where that which I requested in the beginning is not accepted. I understand the political and international context but this isn’t a question of opinion any more but a question of fact. We are ready to take a step back if the allegations are withdrawn,” he insisted.

In a one-liner reaction to the Prime Minister's statement, the Caruana Galizia family said: "We are not conceding to extortion from our public servants".

The case continues in March.