Abdelbaset al-Megrahi has died at home in Tripoli, his brother has told news agencies.
Megrahi, 60, who was sentenced to life in prison for the 1988 bombing of a US airliner which claimed 270 lives, died at home after a long battle with cancer, his brother Abdulhakim told Reuters news agency on Sunday.
David Ben-Ayreah, a spokesman for the victims of Lockerbie families, said: "I was told seven days ago by very good sources in Tripoli that he was slipping in and out of quite deep comas, that the secondary tumours had affected his abdomen and lower chest, and that he had had three blood transfusions.
"His death is to be deeply regretted. As someone who attended the trial I have never taken the view that Megrahi was guilty.
"Megrahi is the 271st victim of Lockerbie."
First Minister Alex Salmond said: "Our first thoughts are with the families of the Lockerbie atrocity, whose pain and suffering has been ongoing now for over 23 years.
"Today's news was not unexpected - Mr Megrahi was diagnosed with terminal prostate cancer, which was the basis on which he was released.
"His death does, however, put to rest some of the conspiracy theories which have attempted to suggest that his illness was somehow manufactured — today's news confirms what we have always said about his medical condition."
Jim Swire, whose daughter Flora was killed in the bombing, said the reported death was a "very sad event".
Dr Swire, a member of the Justice for Megrahi (JFM) group, believes there is evidence yet to be released that will prove Megrahi's innocence.
"It's a very sad event," he told Sky News. "I met him last time face-to-face in Tripoli in December last year, when he was very sick and in a lot of pain.
"But he still wanted to talk to me about how information which he and his defence team have accumulated could be passed to me after his death.
"And I think that's a fairly amazing thing for a man who knows he's dying to do."
Dr Swire added: "Right up to the end he was determined - for his family's sake, he knew it was too late for him, but for his family's sake - how the verdict against him should be overturned.
"And also he wanted that for the sake of those relatives who had come to the conclusion after studying the evidence that he wasn't guilty, and I think that's going to happen."
Commenting on reports of Megrahi's death, Scottish Labour leader Johann Lamont said: "Megrahi was convicted by a Scots court, under Scots law, of the greatest act of mass murder in Scottish history.
"Three years ago the Scottish government chose to release him on the pretext he had just three months to live. That was an insult to the victims.
"At this moment let me, on behalf of the people of Scotland, apologise to the families of all the victims of the Lockerbie bombing, for his early release."
Scottish Liberal Democrats leader Willie Rennie said: "Although this is an end to a chapter of one of the worst terrorist events in Scotland there should be no celebration that Abdelbaset al-Megrahi has died.
"Instead it should act as spur to establish the facts, including whether crucial forensic evidence was withheld from the trial.”
The only man ever convicted of the Lockerbie bombing, Megrahi was diagnosed with advanced prostate cancer on September 23 2008.
On August 20 2009, following medical reports that he had terminal prostate cancer and was unlikely to live more than three months, he was freed by Scottish Government on compassionate grounds and returned to his home country.
The decision caused a political row on both sides of the Atlantic. An unprecedented political row broke out following Megrahi's release, and families of the victims were divided over the decision. Despite his death, Megrahi remains the subject of a bitter division.
Dr Jim Swire said: "Well, I feel I've lost a friend. Remember that I don't believe he was guilty as charged, and I was impressed by his attitude in prison and what he said to me on various occasions. So I feel I've lost a friend. I grieve for his family."
The bombing of the plane, travelling from London to New York four days before Christmas, killed all 259 people on board. Eleven residents of the Dumfries and Galloway town also died after the plane crashed down on their homes. It was Britain's worst terrorist atrocity.
After protracted international pressure, Megrahi was put on trial under Scots law at Camp Zeist in the Netherlands. He was found guilty in 2001 of mass murder and was ordered to serve a minimum of 27 years behind bars.
Despite claims that he could not have worked alone, and the lingering suspicion by some that he was innocent, Megrahi was the only man ever convicted over the terrorist attack.
He was freed from prison after serving nearly eight years of his sentence after he dropped his second appeal against conviction at the Court of Criminal Appeal in Edinburgh.
Scottish Justice Secretary Kenny MacAskill's decision to allow Megrahi to return home to die in Libya sparked international condemnation from some relatives of victims and politicians, who demanded he be returned to jail.
US families were among the most vocal critics of the decision, along with US president Barack Obama. US secretary of state Hillary Clinton branded the move "absolutely wrong".
American fury at the decision was compounded by the hero's welcome Megrahi received in Tripoli upon his return. Prime Minister David Cameron has also come under pressure from some US senators for an independent inquiry into the decision to free the bomber.
However, the move also attracted support from some victims' relatives in Britain, and high-profile figures such as Nelson Mandela and Archbishop Desmond Tutu.
- Timeline of the Lockerbie bomber: Abdelbaset Ali Mohmed al-Megrahi
- Abdelbaset al-Megrahi's death does not end Lockerbie questions
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