Britain did not want to offend  Libya by excluding the Lockerbie bomber from a prisoner transfer deal and was told his death in a Scottish jail would damage relations with Tripoli, official documents showed on Tuesday.

But letters between London and the devolved Scottish government emphasised the case of the Libyan convicted for the bombing was solely a matter for Scotland -- backing up London's claims it had not pressed for his release to win business deals.

The release of dying Abdel Basset Al-Megrahi from a Scottish prison on compassionate grounds last month angered the United States and many relatives of the 270 people killed in the 1988 bombing of a Pan Am jet over the Scottish town of Lockerbie.

"The correspondence shows that, throughout, we have made clear that the transfer of Megrahi was a decision for Scottish Ministers," the Foreign Office said in a statement after the publication of letters.

The documents show that improved ties with Libya, including a prisoner transfer agreement, were key for Britain.

Scotland's wish to have individuals such as Megrahi excluded from any transfer framework was rejected as a potential stumbling block to better relations.

"You ask what I meant by national interests. Developing a strong relationship with Libya and helping it to reintegrate into the international community, is good for the UK," British justice minister Jack Straw said in a letter to Scotland's First Minister Alex Salmond, dated Feb. 11, 2008.

"I do not believe that it is necessary , or sensible, to risk damaging our wide ranging and beneficial relationship with Libya by inserting a specific exclusion into the PTA."         

Documents released by the Scottish government showed Libyan officials had warned London that the death of Megrahi in a Scottish prison would have "catastrophic effects for the relationship between Libya and Britain".

At a meeting in Scotland in March, Libyan officials said they had been reassured that British Prime Minister Gordon Brown did not want Megrahi to die in jail but the decision was one for the Scottish government.

Brown said he had talked to Libyan leader Muammar Gaddafi about the case at the G8 summit in Italy in July.

"I made it absolutely clear to him then that this was not a decision ... that we as the United Kingdom could take. It was a matter for the Scottish Executive, and it was their decision, and their decision alone that would decide it," Brown said in an interview in Tuesday's Financial Times.

Scotland's devolved government, which has had control over many areas of Scottish policy for the past decade, said Megrahi was freed early because he has terminal cancer which could kill him within three months.

On Monday, Libya dismissed speculation it had swung oil deals in Britain's favour in return for Megrahi's release.

However, newspapers reported that Britain put pressure on Scotland to free the former Libyan agent to improve business links with Libya, home to Africa's biggest oil reserves.

British opposition Conservative leader David Cameron said such allegations were embarrassing and could further damage Britain's relations with the United States.-Reuters