The Justice Secretary has admitted the prospect of trade and oil deals with Libya played a part in the handling of the release of the Lockerbie bomber.

Jack Straw said the issue of trade played "a very big part" in his decision to include Abdelbaset Ali Mohmed Al Megrahi in a prisoner transfer agreement (PTA) struck with Libya in 2007.

He cited a lucrative deal which was being sought by British oil giant BP at the time Megrahi was included in the PTA, adding of the trade consideration: "I'm unapologetic about that."

"Libya was a rogue state," Mr Straw told the Daily Telegraph. "We wanted to bring it back into the fold. And yes, that included trade because trade is an essential part of it and subsequently there was the BP deal."

Megrahi was set free from a Scottish jail in August by SNP justice secretary Kenny MacAskill. He was serving life for the 1988 bombing of PanAm flight 103 over Lockerbie, which killed 270 people. Mr MacAskill said he was releasing the mass murderer on compassionate grounds due to his terminal cancer.

The Scottish justice secretary made clear the PTA was not involved in the terrorist’s release.

Megrahi’s return to a hero's welcome in Tripoli, complete with crowds waving the Saltire, sparked revulsion in Britain and the US, where most of the Lockerbie victims lived.

Mr Straw’s comments risk reigniting the row over Megrahi's release, after Prime Minister Gordon Brown insisted earlier this week there was "no conspiracy, no cover-up, no double-dealing, no deal on oil".

On Wednesday, the premier insisted the dominant factor in the British government's policy towards Libya was the need to bring the former pariah state on board in the fight against international terrorism and nuclear proliferation, and not oil or commercial interests.

Mr Straw said Mr Brown was not involved in the decision to press ahead with the PTA, saying: "I certainly didn't talk to the PM. There is no paper trail to suggest he was involved at all."

In January 2008, just weeks after the PTA was sealed, Libya ratified a £550 million oil deal with BP.

Conservatives have called for an independent inquiry into the handling of Megrahi's case, with leader David Cameron insisting he should have been allowed to die in jail.

SNP Westminster Leader Angus Robertson reacted to Mr Straw’s comments, saying: "The Prisoner Transfer Agreement was always tainted – Jack Straw is now admitting it – and Kenny MacAskill was absolutely right to reject the PTA application. Jack Straw's admission that trade was at the heart of the UK Government’s actions over al-Megrahi confirms the wisdom of the Scottish Government in opposing this Prisoner Transfer Agreement from the start, and of the Justice Secretary in rejecting the application.

"In contrast to the UK Government’s dodgy deal in the desert, Scotland’s Justice Secretary made his decision to grant compassionate release to send al-Megrahi back to Libya to die on judicial grounds alone, according to the due process of Scots Law. Kenny MacAskill made the right decision for the right reasons, which is why support has surged forward to 45%, while opposition has fallen to the same level.”