The Government was under renewed pressure to explain its role in the release of the Lockerbie bomber, Abdelbaset Ali Al Megrahi, amid claims it was linked to a lucrative trade deal.
Opposition parties said that ministers had "serious questions" to answer after Libyan leader Colonel Muammar Gaddafi's son, Saif, claimed that the decision to free Megrahi was tied to a trade agreement.
The Foreign Office on Friday night issued a strongly worded statement insisting that there was no deal and that Megrahi's release was purely a matter for the Scottish government.
However Libyan television showed pictures of Col Gaddafi himself meeting Megrahi and praising "my friend" Gordon Brown and the British Government for their part in securing his freedom.
"To my friends in Scotland, the Scottish National Party, and Scottish prime minister, and the foreign secretary, I praise their courage for having proved their independence in decision making despite the unacceptable and unreasonable measures that they faced. Nevertheless they took this courageously right and humanitarian decision," he said.
"And I say to my friend Brown, the Prime Minister of Britain, his Government, the Queen of Britain, Elizabeth, and Prince Andrew, who all contributed to encouraging the Scottish government to take this historic and courageous decision, despite the obstacles."
Shadow foreign minister David Lidington said it was essential that Mr Brown now answered the questions put to him by Tory leader David Cameron as to whether British ministers had at any time suggested or requested that Megrahi should be released or transferred to a Libyan jail.
"I think there are some serious questions to be asked," he told the BBC Radio 4 Today programme. "I am sure that the Libyans were pressing for Megrahi to be released and I think that what both Col Gaddafi and his son have said in the last 24 hours makes it even more important that Gordon Brown, our Prime Minister, answers the questions that David Cameron has put to him. It is very important, I think, for the reputation of our institutions of justice that it is made clear beyond any doubt that this was not connected with some political trade."
As he left a London hospital following a prostate operation, Lord Mandelson denied any deals were made between Libya and Britain and said the suggestion was "offensive". He said: "It's not only completely wrong to make such a suggestion it's also quite offensive."
Read More
Of his meetings with Colonel Gaddafi's son he said he had met him twice this year. He said: "As I have already stated, on both occasions Mr Gaddafi raised the issue of the Libyan prisoner in Scotland's release as all representatives of the Libyan government do. They had the same response from me as they would have had from any other member of the Government. The issue of the prisoner's release was entirely a matter for the Scottish Justice Minister."
