Images of Libyan leader Colonel Muammar al-Qaddafi embracing the Lockerbie bomber when he arrived in Tripoli are sparking fresh international outrage after the convicted terrorist enjoyed a hero's welcome in his native country.

Relatives of the victims of the 270 people killed when Abdel Baset al-Megrahi blew up a jetliner over a Scottish town are furious about the warm greetings extended to him.

With television cameras rolling, Qaddafi hugged Megrahi, and Megrahi kissed him. Libya's leader then praised his "friend" British Prime Minister Gordon Brown and the British government on Thursday for what he called their "courage" in allowing Megrahi's release.

"To my friends in Scotland ... I praise their courage for having proved their independence in decision-making despite the unacceptable and unreasonable measures that they faced," Qaddafi told crowds waving Scottish flags and throwing flower petals. "Nevertheless, they took this courageously right and humanitarian decision."

The latest developments come as Britain rejected any suggestion that it had struck a deal with Libya to free the Lockerbie bomber in exchange for trade agreements specifically benefiting Britain.

Even so, Qaddafi's son, Seif al-Islam Qaddafi, said Megrahi's release was a constant point of discussion during trade talks.

In comments aired on the Libyan television station he owns, he said those discussions stretched back to former Prime Minister Tony Blair's government.

"In fact, in all the trade, oil and gas deals which I have supervised, you were there on the table," Qaddafi's son told Megrahi. "When British interests came to Libya, I used to put you on the table."

British officials insist they did not tell Scottish justice officials what to do — and in any case, they could not, because the decision was not theirs' to make.

"The idea that the British government and the Libyan government would sit down and somehow barter over the freedom or the life of this Libyan prisoner and make it form part of some business deal .... it's not only wrong, it's completely implausible and actually quite offensive," Britain's Business Secretary Peter Mandelson told reporters in London.

Britain has walked a fine line in the issue, as the government in London must distance itself from local affairs in Scotland. While outraged at the jubilant reception Megrahi received in Libya, British leaders have refrained from criticizing the decision to free him, which was made in Edinburgh under Scotland's separate judicial system.

Scottish Justice Secretary Kenny MacAskill decided to release Megrahi on compassionate grounds because the Libyan has prostate cancer and was given only months to live by top British doctors. Compassionate leave for dying inmates is a regular feature of Scottish justice.

In Washington on Saturday, FBI Director Robert Mueller blasted MacAskill for allowing the Lockerbie bomber to return home, saying the decision made "a mockery of justice" and gave comfort to terrorists around the world.

President Barack Obama earlier called the decision "highly objectionable."

"A high-profile return would cause further unnecessary pain for the families of the Lockerbie victims. It would also undermine Libya's growing international reputation," Brown wrote in a letter to the Libyan leader.

While Britain does have oil interests in Libya — notably a $900 million exploration deal between BP PLC and Libya's National Oil Co. — they are small compared to investments by Italy's Eni SpA.

The Associated Press contributed to this report.