‘Megrahi is a millionaire, he got cash from Gaddafi’

Mr Hague said: “I would say that when chairman [Mustafa Abdel] Jalil, of the National Transitional Council, was with us in London in May he committed himself and the council to co-operating fully with the British government on this issue.”

Doubts remained over whether Mr Alagi’s words reflected the thinking of the 40-member transitional council as a whole or whether he wished to lay down a marker to his countrymen and demonstrate to the outside world that Libya remains a sovereign state – one that even in its current state will not be dictated to by western powers.

Mr Hague added: “It is true, it is a fact, that there is no extradition treaty with Libya, but we look to them to co-operate fully.”

Scottish Labour leader Iain Gray said: “The National Transitional Council must realise Megrahi is a prisoner out on licence and I would call on them to make sure he complies with the terms of his release and continues to make regular reports to East Renfrewshire Council when he is found.”

Libya does have an extradition agreement with the UK but it only covers foreign suspects, rather than Libyan nationals.

The Scottish Government released Megrahi in 2009 on compassionate grounds after medical advice that he was three months from death.

He was met with a hero’s welcome on his return to Tripoli and the televised images of cheering crowds angered many relatives of the Lockerbie bombing victims, 189 of whom were Americans.

US president Barack Obama’s administration strongly condemned the decision of justice secretary Kenny MacAskill to release Megrahi, and many US politicians and victims’ families have pressed for his extradition to the US.

Last week, New York senator Charles Schumer urged the new Libyan leadership to hold Megrahi accountable. He said: “A new Libya can send a strong statement to the world by declaring it will no longer be a haven for this convicted terrorist.”

Prime Minister David Cameron – who has always maintained that Mr MacAskill’s decision was a mistake – did not comment on last night’s announcement by Mr Alagi, but a spokeswoman for the Foreign Office said: “The Prime Minister has made clear that the Scottish Government decision to release Megrahi was wrong and misguided.”

Megrahi and his co-accused, al-Amin Khalifah Fhimah, stood trial in May 2000 in the Netherlands at a Scottish court convened at Camp Zeist, a former military base. Megrahi was convicted by a panel of three judges in January 2001 and sentenced to life in prison, while Fhimah was found not guilty.

Megrahi, who has prostate cancer, was initially held in Glasgow’s Barlinnie Prison, and later transferred to Greenock Prison.

Following his return to Libya in 2009 his whereabouts remain unknown and officials at East Renfrewshire Council, who are overseeing his parole, are keen to contact him.

Megrahi’s neighbours last night described him as a “wealthy recluse” who was constantly surrounded by security guards.

One neighbour said he had been whisked away by security guards last week when Tripoli fell to rebels battling forces loyal to Gaddafi. “The day Tripoli fell, four security men, his private security, took him, his wife and his sons and left. They left in a Mercedes,” said Ahmed Mlaaty, 20, a student and one of Megrahi’s neighbours, standing outside his large villa.

Others said Megrahi, a former Libyan intelligence operative, owned several properties in Demeshk, one of Tripoli’s most exclusive areas.

Megrahi’s properties appeared empty, with a padlock on the gate of one residence where he was said to receive guests.

Sprays of bougainvillea, tall palm trees and brightly coloured flowers could be seen behind the high walls of the neighbourhood’s large villas.

Mr Mlaaty said: “He kept himself to himself … He’s a millionaire. He gets his money from big daddy [Gaddafi]. People keep their distance. They don’t want to get into state affairs, as it will only bring trouble.”

Another neighbour, who had attended local functions with Megrahi but had never spoken to him, said he was a reserved and smartly presented man. Most said Megrahi appeared unwell.

Senior policeman Ali Ahmed al-Khudair, 40, said: “I saw him many times, he was in a wheelchair, he looked very ill, very thin. He always had security, more than one car. He never went anywhere without them.”

He added that he resented the security patrols that accompanied Megrahi’s arrival in the neighbourhood.

“He wasn’t a millionaire before, but he is now,” he said. “He came here after he was released from prison. Then he bought these houses. This is one of Libya’s top neighbourhoods.”

Another neighbour said Megrahi had caused no-one any harm and that his guilt had not been proved.

“Everyone associates him with Lockerbie, but I’m not sure he was involved,” said Noora Abdul Hadi, 27, a doctor.

Attiya al-Usta, 77, said he had seen Megrahi just before the February uprising against Gaddafi’s 42-year rule.

He said: “When he came back from Europe he looked ill but recently he looked fit and neat.

I saw him just before the revolution. He didn’t look ill at all. He was sitting in a chair on his balcony. He looked 100 per cent.”