Mandelson spoke to Gaddafi's son

Lord Mandelson's summer holiday is in the spotlight again

Lord Mandelson met Libyan leader Muammar Gaddafi's son a week before reports the Libyan man convicted of the Lockerbie bombing could be freed.

The Labour peer spoke briefly about the case with Saif al-Islam Gaddafi while on holiday in Corfu, it has emerged.

But Lord Mandelson's spokesman said subsequent reports of Abdelbaset Ali al-Megrahi's possible release from jail were "entirely coincidental".

Megrahi, who is terminally ill, may be freed on compassionate grounds.

Lord Mandelson - whose Corfu holiday meeting with shadow chancellor George Osborne dominated the headlines this time last year - was once again staying as a guest of the Rothschild family on the Greek island.

His stay coincided with that of Saif Gaddafi, who is seen as the Libyan leader's most likely successor, by a single night but this was long enough for the two men to discuss the Megrahi case.

"There was a fleeting conversation about the prisoner. Peter was completely unsighted on the subject," said Lord Mandelson's spokesman.

The spokesman stressed that the decision to release Megrahi was for the Scottish government and Lord Mandelson had only learned about it through the media.

Gravelly ill

Last week, the BBC reported that it understood Megrahi would soon be released, prompting an angry reaction from some relatives of the 270 people murdered when Pan Am flight 103 exploded in 1988, and renewed political opposition from the US.

It was subsequently revealed that the Libyan, who is serving a life sentence in Scotland's Greenock Prison, had applied to drop his second appeal against his conviction.

Scottish Justice Minister Kenny MacAskill has said he will deliver a decision on the fate of Megrahi, who is gravely ill with prostate cancer, in the next two weeks.

Chancellor Alistair Darling, who is standing in for Prime Minister Gordon Brown, was challenged about the case earlier, but told BBC News: "We would not intervene in what has to be a matter for the Scottish Justice Secretary."

Last summer, Lord Mandelson became embroiled in a very public falling out with shadow chancellor George Osborne after it was revealed both men had accepted the hospitality of Russian tycoon Oleg Deripaska, aboard his yacht moored off Corfu.

Mr Osborne was forced to deny claims he tried to solicit a £50,000 donation for the Conservative Party, while Mr Mandelson, as he then was, faced accusations of a potential conflict of interest with his then role as European Trade Commissioner.

The two men were both guests of the Rothschilds at the time of their meeting.

Britain's relations with Libya have steadily thawed since it agreed to give up its nuclear ambitions in 2003 and Prime Minister Gordon Brown held one-to-one talks with Muammar Gaddafi for the first time at July's G20 summit in Italy.

But Saif Gaddafi provoked an outcry last year when he described relatives of some of the 270 Lockerbie victims as "very greedy" and accused them "of trading with the blood of their sons and daughters".