IT'S A relatively short drive from the British Ambassador's residence, just off the Sharia al Shatt, to the government district in Tripoli. The route is well known to local drivers who work for the embassy. On Thursday, just before the Libyan aircraft that would carry Abdelbaset Ali Mohmed al-Megrahi back to his home soil lifted off from the runway at Glasgow, the British ambassador, Sir Vincent Fean, was looking at the contents of an emailed letter he'd just received from Gordon Brown's staff. His orders were clear enough. He had to deliver the letter in person to Libyan prime minister, Baghdadi Mahmudi.

The letter was an appeal to Libyan leader, Muammar Gaddafi. Brown, still on his summer holiday and technically with his hands off the rudder, nevertheless read a brief from a Foreign Office analyst on Middle East affairs that told him Megrahi was "almost certain" to receive a hero's welcome when his plane touched down. At the centre of the welcoming committee, the report added, would be Gaddafi's son, Saif al-Islam Gaddafi. The brief was short, though the contents were accepted as relatively prosaic stuff by the many Arabists inside the FCO. But it nevertheless sparked off a diplomatic red alert that Downing Street believed it had to immediately address.

Brown's appeal to Gaddafi was direct. It asked Libya to "act with sensitivity" and to ensure a "low-key return" for the former Libyan intelligence officer who had spent his last eight years in a Scottish prison, convicted of the Lockerbie bombing and the murder of 270 people.

The second part of the letter to Gaddafi was what one Foreign Office source called "a diplomatic threat put in the nicest possible terms".

The Arab news agency, Jana, said Brown's letter to Gaddafi "the leader of the revolution" dealt with "bilateral co-operation". The FCO say this is not quite correct. The UK version is that Brown spelled out improvements in British-Libyan relations that had taken place since Tony Blair's visit in May 2007. The letter mentioned the lifting of sanctions, the removal of Libya from the US list of state-sponsored terrorism, co-operation on areas such as defence, trade and investment, education, science and technology. The letter expressed the hope of continued broadening of "areas of co-operation". Implicit in the text was that Libya was risking a lot if, according to the FCO source, "it didn't go easy on the hero's welcome". And there was a reminder to Gaddafi which the FCO said was put like this: "And don't forget, you need us."

Within hours, Sir Vincent, now back in his residence, knew the meeting with Prime Minister Mahmudi had been a waste of time.

Thousands turned up at Tripoli airport to greet Megrahi. Saltires were seen being waved by the crowd which had been taken to the airport on specially arranged buses. Libyan television news crews were ready for Megrahi to stand at the top of the aircraft steps and raise his fist in celebration. The crowds, which the authorities were now trying to keep away from the mayhem, cheered when Megrahi finally stepped back on to Libyan soil to be embraced by Saif al-Islam Gaddafi.

At a West Wing press briefing in the White House, Barack Obama's spokesman Robert Gibbs described the scenes as "outrageous and disgusting". The US president called them "highly objectionable". Like Brown, Obama had also sent a message to Tripoli advising them that a hero's welcome would not go down well.

The UK Foreign Secretary, David Miliband, said the airport welcome had been "deeply upsetting." But having issued a warning that was comprehensively ignored by Libya, what action would the FCO now be taking?

The official FCO line is that there is a "watching brief", a wait-and-see before any action is taken. There is acceptance that Libya tried to limit the celebrations at the airport, but simply lost control. Washington is similarly taking a let's-see-what's-next approach. With Scotland's First Minister, Alex Salmond, evidently anxious to repair the diplomatic tear in the fabric of relations between Scotland and the US that the release of Megrahi has caused, it's less clear what Brown and Downing Street will say to break a silence on the issue that has again left critics of the PM saying he is conveniently hiding, or worse has "crossed the road" to leave Holyrood in the firing line.

Suspicions that a UK issue of trade and international commerce is being dressed up to resemble a Scottish legal decision to release Megrahi on "compassionate grounds" appeared to be confirmed by Gaddafi's son, who said Blair's visit in 2007 had laid the foundations of Megrahi's release. He told the Al Mutawassit television channel that: "In all commercial contracts with Britain for Libyan oil and gas, Megrahi was an issue always on the negotiating table."

The official FCO translation of what Saif al-Islam said pointed to Libya never wanting to abandon Megrahi, a message conveyed yesterday by Lord Mandelson. Miliband acted quickly and dismissed the claim Megrahi's release was part of, or linked to, any trade deal. "There is no deal," said Miliband. "All decisions relating to Megrahi have been made exclusively by Scottish ministers, the Crown Office in Scotland and by the Scottish judicial authorities."

Lord Mandelson, Brown's first secretary, who in his previous role as trade secretary held two meetings earlier this year with Saif al-Islam, said there was "no link" between Megrahi and UK-Libyan business relations. He added that it was "insensitive" to the victims' families to suggest otherwise.

Mandelson also said it was preposterous to suggest the UK government had reached any covert arrangement with Libya and then pressurised the SNP administration in Edinburgh to deliver. On Saif al-Islam's claim that the issue of Megrahi had always been on the negotiating table, Mandleson said "all representatives of the Libyan government" had regularly raised the issue of Megrahi's release.

What Miliband and Mandelson cannot dismiss is that since Blair's visit in 2007 Libya has become a commercial target for oil and gas investment, banks and the chemical industry with deals in these lucrative sectors routinely acknowledged by analysts' reports that they are made against a backdrop of a highly politicised trading environment.

BP has plans for a $20 billion oil and gas investment programme in both offshore and onshore Libyan fields still to be fully explored. More than one billion dollars have already been spent. The release of Megrahi will see petroleum investment accelerate with other UK "blue chip" companies now expecting business opportunities to increase. Had the release of Megrahi been a Westminster decision, Miliband's denial would not have been enough to keep the allegations of political collusion from increasing. But Holyrood, and the powers of the devolved parliament, have been convenient. Kenny MacAskill, the Scottish justice secretary, who has little experience of international affairs, is said to have constantly tried to involve Westminster in his decision. Regular contact with the FCO was made by MacAskill and his advisers since Libya first approached the Scottish government in May this year with a request for Megrahi's release on medical grounds. But both Downing Street and the FCO have kept their distance, with the prime minister's continued silence now an issue he will have to address before the end of the summer break.

The No 10 silence, according to one Whitehall source, was carefully crafted diplomacy. "If MacAskill had kept Megrahi in prison, Downing Street could have told the Americans they positively helped the decision, and Libya could have been told it wasn't Westminster's call to make. And with Megrahi back in Libya, the Americans are told it wasn't in Westminster's power, meanwhile the Libyans are waving Scottish flags. Silence sometimes works."

Salmond - who initially criticised the 2007 "memorandum of understanding" signed by Blair and Gaddafi as constitutionally flawed, with the First Minister saying Blair had no authority over Scottish judicial matters - said he believed MacAskill had taken the right decision. Salmond will, however, be relieved that Megrahi's release was not made under the terms of the UK-Libyan prisoner release treaty. MacAskill's only positive political option was to look carefully at grounds of compassion and the imminent death of Megrahi.

Conservative leader David Cameron is demanding that Brown makes clear whether or not he believes MacAskill made the right call. In a letter to Brown, Cameron tells the PM: "It is curious that while others have commented, Britain's own prime minister has not I believe the public are entitled to know what you think of the decision to release Megrahi."

There was no indication from No 10 yesterday that Brown would be breaking his silence any time soon.