The Scottish court's decision comes as Scotland's government considers whether to release Abdel Baset al-Megrahi on compassionate grounds, return him to Libya under an extradition agreement or keep him jailed in Scotland.

Under British law, people with pending legal appeals cannot be transferred to another country.

Lawyers for the former Libyan agent said their client was in "distress" with terminal cancer and should be released to die at home.

"His absolute priority in the little time he has left is to spend it with his family in his homeland," lawyer Maggie Scott told Edinburgh's High Court.

Megrahi has been sentenced to 27 years in prison for the 1988 bombing of a Pan Am flight over Scotland, which killed 270 people. He has always maintained his innocence.

The United States opposes Megrahi's release and is lobbying Scotland to hold him in prison until he serves out his sentence. The Lockerbie bombing killed 189 Americans.

A group of US senators has written to the Scottish minister responsible for the case, Justice Secretary Kenny MacAskill, appealing to him not to let Megrahi go.

MacAskill met with cabinet colleagues to discuss Megrahi's case for compassionate release on Tuesday in the northern city of Aberdeen.

Ever since the 57-year-old Libyan became the sole person convicted of the terrorist attack by a special Scottish court assembled in the Netherlands in 2001, victims have been divided over whether he is in fact guilty.

nw/AP/AFP/Reuters
Editor: Susan Houlton