Maria Bentley-Dingwall: We are looking at going to judicial review

Home Secretary Jack Straw said because Mr Bentley's conviction was overturned on the basis of mistakes by the trial judge, his case fell outside the compensation scheme.

There were no other "sufficiently exceptional" circumstances leading up to his conviction to merit a payment, Mr Straw said.

Derek Bentley had a mental age of 11

Mr Bentley was 19 when he was convicted of the rooftop shooting in south London of a policeman and sentenced to death by hanging, although he did not fire the fatal shot.

The jury was not told Mr Bentley had a mental age of 11 and controversy over the case helped to fuel the campaign for the abolition of capital punishment.

After a long fight to clear his name, relatives finally learned last July that the conviction had been quashed because the trial judge's summing up and direction to the jury had denied him a fair trial.

The Bentley family applied for compensation within days of that decision.

Derek Bentley's surviving relatives, his niece Maria Bentley Dingwall and brother Denis, condemned the home secretary's ruling and said they would take their challenge to it as far as the European Court of Human Rights if necessary.

Denis Bentley has condemned the decision

A statement issued by their solicitors said: "It was submitted on behalf of the family that there were clearly 'exceptional circumstances' in this case - the appalling prejudice and mistakes of the trial judge which led to the wrongful execution of a young man who should never have been convicted."

Mrs Dingwall Bentley said no amount of money could compensate the family for the loss of her uncle's life.

But she said a payment was the only form of "retribution" open to them.

"As soon as they killed him my family gave up their lives to make sure he was exonerated. What price can you put on that?'' she said.

"It's just a form of justice for us. We can't take anyone to court for Derek's killing. This is our only form of retribution. I really thought we would receive something."

Jack Straw: Enormous sympathy for the Bentley family

Mr Straw said on Monday he had "enormous sympathy" for the family, but he could not sanction a payment because of the circumstances of the wrongful conviction.

Mr Straw said: "I am deeply sorry that Derek Bentley was executed as a result of a miscarriage of justice and that the quashing of his conviction has come so late for his surviving relatives.

"My decision not to make a compensation payment must not be interpreted as detracting from Derek Bentley's acquittal."

Tamsin Allen, the Bentleys' legal representative, said: "It's based on the fact that the Court of Appeal decision was not based on the production of any new evidence.

"Strictly speaking that doesn't fall within the compensation scheme but there is the ex-gratia scheme which says there can be compensation when there are exceptional circumstances.