TORONTO - Convicted Canadian war criminal Omar Khadr, who became a poster child for the excesses of the war on terror, is a significant step closer to leaving Guantanamo Bay with a formal request for his transfer to Canada now in Ottawa's hands.

But diplomatic wrangling persisted, with one source suggesting the Americans were "desperate" to send Khadr home, and that a reluctant Canadian government was essentially being strong-armed into taking him.

According to the source, the Americans are "bending over backwards" to ensure Khadr's exit from Guantanamo Bay and would have to "bend their way around a number of their own rules" to make that happen.

"The U.S. needs to get rid of this guy for their own reasons," said one source familiar with the file.

"The United States basically asked Canada for a diplomatic favour and Canada previously agreed to look at a request of this nature favourably."

A spokeswoman for Public Safety Minister Vic Toews confirmed on Wednesday that the federal government was considering the request to take him off U.S. hands, which sparked an outpouring of mostly anti-Khadr reaction among Canadians.

"The government of Canada has just received a completed application for the transfer of prisoner Omar Ahmed Khadr," spokeswoman Julie Carmichael said.

"A decision will be made on this file in accordance with Canadian law."

The Pentagon would not confirm that Secretary of Defence Leon Panetta had signed off on the formal transfer request, which also requires the president to give Congress 30 days notice.

Mark Toner, spokesman for the U.S. State Department, acknowledged Wednesday that Washington wanted to empty Guantanamo's cells and that the government had approved Khadr's transfer.

He offered no timeline or details.

"We're working quickly and deliberately to close this process out," Toner said.

Khadr, 25, was eligible to return to Canada from Guantanamo Bay last October under terms of a deal reached a year earlier in which he pleaded guilty to five war crimes committed in Afghanistan as a 15-year-old.

In exchange for his guilty pleas, he received an eight-year sentence from a much-maligned military commission — but only one year had to be served at the U.S. naval base in Cuba, where he has been incarcerated since the fall of 2002.

Prime Minister Stephen Harper's government has been reluctant to accept Khadr, whom it deems a dangerous terrorist convicted under American rules, and diplomatic arm-twisting over his transfer has continued.

American sources have said the delay has complicated commission proceedings against other inmates because it has made them reluctant to strike their own plea deals for fear they would remain imprisoned anyway.

At the same time, Toews appears to have little choice but to sign off on Khadr's return, which would happen at U.S. expense.

Should Khadr remain in Guantanamo for his full sentence, he would be able to return to Canada and walk the streets without any restrictions.

As it now stands, Khadr would be eligible for parole under Canadian rules when he does get back, which sources have told The Canadian Press would likely happen by the end of next month.

Word of latest development sparked a torrent of mostly anti-Khadr comments on Canadian media websites.

One poster described him as "terrorist trash" and another said: "Put him in the deepest, darkest, remotest hole for life."

Only a relative few offered any sympathy, accusing his critics of bigotry, and noting Khadr was just 15 when he committed his crimes.

Khadr's Canadian defence lawyer John Norris said Wednesday he was "pleased" with the steps taken.

"We look forward to a prompt decision from the minister," Norris said. "We trust that he will be dealing with it expeditiously."

Norris said he had no information on where Khadr would be placed on his return.

Jack Harris, the Opposition New Democrats' justice critic, said it was "high time" the Conservative government accepted Khadr.

"The Supreme Court of Canada has already indicated that Mr. Khadr's constitutional rights had been violated by the Harper government," Harris said from Ottawa.

"They should stop dragging their heels on this and deal quickly with the request."

Khadr was badly wounded after a four-hour firefight when he was captured in the rubble of a compound in Afghanistan in July 2002.

He pleaded guilty to murder in violation of the rules of war for throwing a grenade that killed an American special forces soldier and blinded another.

Khadr's father, Ahmed Said Khadr, was a close associate of the late terrorist leader Osama bin Laden and was accused by the Americans of being an al-Qaida financier.

The Khadr family, who live in Toronto, maintains the elder Khadr spearheaded a Muslim charity before he was killed by Pakistani forces in 2003.

The family refused to comment on the latest development, but have earlier said Omar was extremely anxious to see his mother again.

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