The Scottish Government insisted no decision has yet been taken to free Abdelbaset Ali Mohmed Al Megrahi, who has terminal prostate cancer.

But there was mounting speculation that Megrahi, who is serving a life term with a minimum of 27 years, could go free on compassionate grounds as early as next week, in time for the start of Ramadan.

He was convicted in 2001 by a Scottish court sitting in the Netherlands of the Pan Am Flight 103 airline bombing in 1988, which claimed 270 lives.

US relative Bob Monetti, who lost his son Rick in the outrage, said he was “very sceptical” of the report, and of Megrahi’s reported illness.

“I understand there are privacy issues involved but he applied for compassionate release a year ago when he was in imminent danger of dying, and he seems pretty healthy still,” he told BBC Radio Scotland.”

He said of the Lockerbie bombing: “We understand Megrahi was just a tool in this, he wasn`t really the person that decided what to do.

“We would really rather see (Libyan leader Colonel Muammar) Gaddafi in jail, but Megrahi was the one who was convicted and lost his appeal.

“So I’m really happy to see him in jail.”

He went on: “If he literally has few weeks to live, I have no problem with compassionate release.

“I have a big problem with this mythical illness that he seems to have that nobody is allowed to talk about because of privacy issues.”

Susan Cohen, whose only child 20-year-old Theodora was one of 35 Syracuse University students on Pan Am flight 103, said any suggestion that Megrahi should be freed on compassionate grounds was “vile”.

Speaking from her home in New Jersey, Mrs Cohen said: “Any letting out of Megrahi would be a disgrace. It makes me sick, and if there is a compassionate release then I think that is vile.

“It just shows that the power of oil money counts for more than justice. There have been so many attempts to let him off. It has to do with money and power and giving Gaddafi what he wants. My feelings, as a victim, apparently count for nothing.”

American Stephanie Bernstein, who lost her husband Michael in the attack, said freeing Megrahi would send a message that terrorism is not being taken seriously.

She said: “I think it would play right into Colonel Gaddafi’s hands. It shows that if you bide your time and if you wait long enough you can be rewarded, and this is what Colonel Gaddafi has done.”

Kathleen Flynn, the mother of another American victim, told GMTV she was convinced Megrahi was guilty.

“My husband and I went to the trial practically every day for many, many years. We watched all the evidence and there is no question in my mind that this man is guilty.”

She said she feared Megrahi would receive a hero’s welcome if he returned to Libya.

But the mood among some British relatives was different.

Dr Jim Swire, who lost his daughter Flora in the bombing, said: “I am someone who does not believe he is guilty.

“The sooner he is back with his family, the better.

“On reasonable human grounds it is the right thing to do and if it’s true that he is to be returned on compassionate grounds, then that would be more to Scotland’s credit than returning him under the prisoner transfer agreement.”

And Martin Cadman, who lost his son Bill, aged 32, in the disaster. said: “I hope it is true as it’s something we’ve been wanting for a long time.

“I think he is innocent and even if he were not innocent, I still think it’s certainly the right thing to do on compassionate grounds”

The Scottish Government is considering a request by Megrahi to be released on compassionate grounds. Another application has been made for him to be transferred to serve the rest of his sentence in a Libyan jail.

A spokesman for First Minister Alex Salmond said reports that Megrahi was to be released were “complete speculation”.

He said: “No decision has been taken, either on the application for compassionate release or the application under the prisoner transfer agreement and so it is entirely speculation.”

Justice Secretary Kenny MacAskill, who has the final say over whether Megrahi should be transferred or released, visited the Libyan last week in Greenock prison, where he is serving his sentence.

Megrahi is appealing against his conviction for the bombing, and a prisoner transfer cannot be granted while this appeal is under way.

But if he were granted release on compassionate grounds, he would not have to drop his appeal for this to be granted, unlike the prisoner transfer option.

The Scottish Government spokesman said: “We can confirm that no decision has been made on applications under the prisoner transfer agreement or compassionate early release by Mr Al Megrahi.

“Justice Secretary Kenny MacAskill is still considering all the representations in both cases and hopes to make a decision this month.”

Mr Cadman said American relatives convinced of Megrahi’s guilt - and sceptical of his illness - should “get real”.

“I think they should get real and remember that the likely cause of the bombing of Pan Am 103 was the shooting down by an American ship of an Iranian Airbus in 1988,” he told BBC Radio Scotland’s Good Morning Scotland programme.

Mr Cadman said the original trial was a “farce” and described his disappointment that nothing has yet been settled.

On the appeal, he added: “The process of law I find fairly puzzling.

“The fact that an appeal is allowed implies that there is doubt about guilt.

“And yet the whole process goes on as though the man is still guilty until he is proved innocent.

“I find that a rather odd way of going about things.”

Lockerbie resident Maxwell Kerr also said he believed Megrahi should be released from jail on compassionate grounds.

Speaking on BBC Radio Scotland’s Good Morning Scotland programme he said: “As far as I’m concerned he should be released on compassionate grounds.”

He said church leaders had called for that to happen, and added some of the relatives of the British victims also supported such a move.

Mr Kerr said: “I know Jim Swire has said quite often he should be released or sent back to Libya.”

Megrahi is “very ill” and is not expected to live beyond the end of the year, an MSP campaigning on his behalf said today.

SNP MSP Christine Grahame, who has visited Megrahi in Greenock prison, said his appeal would continue if he was granted compassionate release.

But Ms Grahame said she had no inside information whether he was to be released.

She said: “If it is the case, and it’s still speculation, compassionate release is just not only for Mr Megrahi but the victims’ families.”

Unlike a prisoner transfer request, compassionate release did not carry the requirement that appeal proceedings should be dropped.

And if Megrahi died before the outcome of the appeal, his family would “stand in his shoes”.

She said she had not spoken to him in recent days but he was getting “very ill and pretty desperate”.

“I’m sure the Cabinet Secretary for Justice has the medical evidence, but from what I know it’s at most a few months (to live) and not beyond Christmas,” she said.

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