Scottish families currently have to go to England to hear inquests
Inquests into Scottish military deaths overseas could be held in Scotland under new measures put forward by the UK Government.
The decision follows a lengthy impasse between Holyrood and Westminster over the current law, which requires deaths to be investigated in England.
Under the plans, the Defence Secretary could ask the Lord Advocate in Scotland to hold a fatal accident inquiry (FAI).
A total transfer of powers to Holyrood has been rejected by the UK government.
The new proposals would mean an amendment to a new bill published this week in the Commons, and would also require a minor change to the law at Holyrood.
The current inquest process has been criticised by bereaved families, some of whom have had to wait up to two years for a coroner to carry out an inquest.
Scottish ministers had hoped to amend the devolution settlement to permit Holyrood to legislate on fatal accident inquiries into deaths of service personnel.
However, UK Armed Forces Minister Bob Ainsworth said there would be difficulties in drafting such a provision in a way which accurately identified the cases which should be covered.
In a letter to Scottish Justice Secretary Kenny MacAskill, he said: "An important consideration is that individual cases are often not clear cut.
"Sometimes, unfortunately, more than one Service person is killed in the same incident - perhaps one from Scotland and another from England or Wales - and there should only be one inquiry in such circumstances.
"In other cases, the family's own preferences may not be easy to determine, especially for more complex, divided families. This means that careful consideration will need to be given to which jurisdiction is best placed to pursue the investigation.
"Ultimately, the decision will need to be taken at UK level, working in partnership with colleagues in the devolved administration, on a case by case basis in the best interests of the particular Service families concerned."
Mr Ainsworth said the new mechanism would also allow inquiries to be held in Scotland for any non-Service personnel killed in war zones, such as civil servants, contractors or embedded journalists.
He urged the Lord Advocate and Scottish ministers to consider the proposals as soon as possible so that any necessary measures could be included in the Coroners and Justice Bill.