Moamer Kadhafi's regime warned of "dire consequences" for relations between Libya and Britain if the convicted Lockerbie bomber died in a Scottish jail, secret files released on Sunday showed.
In the latest revelations from intelligence documents obtained by media and rights groups in Tripoli, senior British officials feared Kadhafi "might seek to extract vengeance" if the cancer-stricken Abdelbaset Ali Mohmet al-Megrahi was not released.
The Mail on Sunday newspaper cited documents found strewn in the abandoned British ambassador's residence in Tripoli which it said showed the reasons why London wanted the devolved Scottish government to free Megrahi.
The Conservatives of current Prime Minister David Cameron were bitterly opposed to his release, which happened while the Labour Party of prime minister Gordon Brown was in office.
Robert Dixon, the head of the Foreign Office's north Africa team, wrote to then-foreign secretary David Miliband in January 2009, warning that Kadhafi wanted Megrahi to return to Libya "at all costs".
"Libyan officials and ministers have warned of dire consequences for the UK-Libya relationship and UK commercial operations in Libya in the event of Megrahi's death in custody," he wrote.
Kadhafi would see it as "as death sentence".
Dixon added: "We believe Libya might seek to exact vengeance."
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The confidential documents showed that British diplomats feared that the reprisals might include the harrassment -- "or worse" -- of British nationals; the cancellations of lucrative oil and gas contracts with British firms; and the end of counter-terror cooperation and defence deals.
Megrahi is the only man convicted over the December 1988 bombing of Pan Am flight 103, which killed 270 people, mostly Americans, when it exploded over the Scottish town of Lockerbie.
Megrahi, who has terminal cancer, was said to be only three months from death when he was freed from a Scottish jail on compassionate grounds on August 20, 2009.
A review released in February found that the Labour government did "all it could" to help Libya in pursuing Megrahi's freedom, fearing that "UK interests would be damaged" otherwise.
Alastair Darling, Britain's finance minister from 2007 to 2010, admitted that the Labour administration was trying to keep Kadhafi onside, but dismissed the idea that their pressure had in fact managed to secured Megrahi's release.
"We wanted to bring Kadhafi in from the cold because at that time it was thought that that was going to be possible," he told BBC television.
"It's true to say that the British government wanted Megrahi out. It's probably true to say that (Scottish First Minister) Alex Salmond fancied a wander into the international stage.
"There was no other way to try and bring Kadhafi under control... It didn't work and he now looks pretty high finished."
He said the well-known "visceral dislike" between Labour and Salmond's Scottish Nationalists meant "the idea that there was some sort of collaboration between the two just seems to be nonsense".