Al-Megrahi is serving a life sentence in a Scottish prison
Tony Blair has accused the Scottish Executive of failing to take the initiative in the row over the fate of Abdelbaset Ali Mohmed al-Megrahi.
The prime minister made the accusation to the House of Commons in response to a question from the SNP's Westminster leader Angus Robertson.
Mr Blair claimed Alex Salmond's office failed to contact Downing Street with their initial concerns on the issue.
The Libyan is serving life for killing 270 people in the 1988 Pan Am bombing.
He was tried under Scottish law at a specially convened court at Camp Zeist, in the Netherlands, and is currently held in Gateside Prison in Greenock, near Glasgow.
The row erupted last week after it emerged that the UK Government had signed a memorandum of understanding on 29 May with Libya covering prisoner exchanges.
Scotland's First Minister Alex Salmond had claimed the deal could allow al-Megrahi to serve the remainder of his sentence in Libya, and he had protested to Tony Blair about a lack of consultation with the executive.
However, the UK Government had insisted the document did not cover al-Megrahi's case and that no deal had been signed over his future.
Mr Blair, who has yet to contact Mr Salmond since he became first minister almost a month ago, criticised the executive over their handling of the issue.
He said: "Frankly all it would have required was an enquiry from the first minister's office and it would have been cleared up immediately.
"Instead of which we were subjected to a claim that we were trying to drive this through without consultation with the devolved government in Scotland and it simply is not correct.''
The SNP hit back, accusing the prime minister of being "defensive, in denial and ill-informed".
Angus Robertson said: "The whole point of the 1999 concordats governing Westminster/Holyrood relations is that the Scottish government is to be involved 'as fully as possible' in the formulation of policy touching on devolved areas, which clearly wasn't done.
"The first minister's office told the prime minister's office last Wednesday that Mr Salmond intended to make a statement to the Scottish Parliament on the Thursday."