He could have been conflating Santorini and Crete, which is a much larger island which was also home to the Minoans. Not larger than modern-day Libya, but perhaps larger than the populated area of Libya at the time.
When the Greeks of Plato's time talked about Libya they aren't talking about the modern country, they mean Africa west of the Nile which is considerably larger, though they didn't realize the full extent of Africa's size.