By Claudia Parsons

NEW YORK, Aug 28 (Reuters) - The U.S. government on Friday dispelled concerns among angry residents of the New Jersey town of Englewood that Libyan leader Muammar Gaddafi would pitch his tent among them during the U.N. General Assembly.

Many in New Jersey, upset by the release of a Libyan imprisoned in Scotland for the Lockerbie bombing and his welcome home by Gaddafi, had protested against the possibility of the North African leader staying in their midst.

The protests were partly prompted by feverish construction work at a Libyan Embassy property in the upscale suburban town, but the State Department said rules governing the property precluded Gaddafi's use of it for this visit.

"In keeping with prior arrangements, the Englewood, New Jersey property is not available for any use in connection with the upcoming visit," State Department spokesman Ian Kelly said in Washington.

New Jersey Congressman Steve Rothman also said in a statement that Libyan officials in Washington had told him Gaddafi would not be staying in Englewood, which has a large Jewish population.

A famously eccentric figure, Gaddafi is known for pitching a large Bedouin tent on his trips abroad. A request to set up his tent in New York's Central Park was turned down.

Englewood Mayor Michael Wildes said the town had sought an injunction to stop construction work on the Libyan Embassy property on the grounds that building and environmental codes had been violated.

Wildes said Gaddafi should not even be allowed a U.S. visa after Lockerbie bomber Abdel Basset al-Megrahi was given a hero's welcome on his return to Libya last week.

LOCKERBIE BOMBING

Megrahi, the only person convicted of the bombing of a Pan Am jet over the Scottish town of Lockerbie in 1988 that killed 270 people, was freed from a life sentence in a Scottish jail on compassionate grounds because he is dying of cancer.

Gaddafi is due to address the U.N. General Assembly on Sept. 23 in a visit expected to draw protests similar to those in recent years when Iranian President Mahmoud Ahmadinejad attended the annual gathering of world leaders.

Officials in New Jersey, where 38 Lockerbie victims lived, had aske victims lived, had asked the State Department to restrict Gaddafi to the area around U.N. headquarters in Manhattan, across the Hudson river from New Jersey.

The 1982 "Foreign Missions Act" governing the use of diplomatic missions in the United States gives Washington the power to regulate the use of embassy property.

"Any use of this property other than the personal use of the Libyan ambassador and his family has to be reviewed by the State Department," Kelly said.

Long an international pariah, Gaddafi has improved his international standing since abandoning a pursuit of nuclear weapons and accepting responsibility for the Lockerbie bombing. (Additional reporting by Sue Pleming in Washington and Edith Honan in New York; Editing by Michelle Nichols and David Storey)

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