The previous UK government did "all it could" to help facilitate the release of Lockerbie bomber Abdelbaset Ali al-Megrahi, a report on the case says.
Sir Gus O'Donnell, the country's most senior civil servant, said there was an "underlying desire" to see Megrahi released before he died.
But his report concluded that it was made clear to Libya that the final decision was up to Scottish ministers.
And there was no evidence of Labour pressure on the Holyrood government.
Prime Minister David Cameron, who set up the investigation, said the release had been "profoundly wrong" but added there was no need for a fresh inquiry.
Labour's Gordon Brown, who was prime minister when Megrahi was freed in August 2009, said the decision had been made by Scottish Justice Secretary Kenny MacAskill and "no-one else".
But Stephanie Bernstein, from the US, who lost her husband in the bombing, told the BBC: "It's disgusting, absolutely appalling. It looks as if the Labour government were acting as attorneys for the Libyans."
Most of the 270 people who died when Pan Am Flight 103 blew up over the Scottish town of Lockerbie in 1988 were Americans.
Tommy Vietor, spokesman for the US National Security Council, said: "It's well-known that we believe Mr Megrahi should not have been transferred and instead should have served out the full sentence for his heinous crime."
'No legal barrier'
Megrahi, the only person convicted of the atrocity, was freed on compassionate grounds when, terminally ill with prostate cancer, Scottish doctors suggested he had only three months to live. He is still alive.
The report by Sir Gus, the Cabinet Secretary, said the UK government had had an "underlying desire to see Mr Megrahi released before he died".
It added that, in 2008, the government developed a policy that it "should do all it could, whilst respecting devolved competences, to facilitate an appeal by the Libyans to the Scottish government for Mr Megrahi's transfer under the PTA (prisoner transfer agreement) or release on compassionate grounds".
"This action amounted to: Proceeding with ratification of the PTA; explaining to Libya in factual terms the process for application for transfer under a PTA or for compassionate release, and informing the Scottish government that there was no legal barrier to transfer under the PTA," the report said.
But Sir Gus said he had "not seen any evidence" that the UK government had pressured or lobbied the Scottish government - run by the Scottish National Party - for the transfer or release of Megrahi.
He said the information showed UK ministers had changed their position on the transfer of Libyan prisoners due to commercial considerations, including lobbying by oil firm BP.
But, in a statement to the UK Parliament, David Cameron dismissed claims, investigated by a recent US Congressional inquiry, that Megrahi's release may have been due to pressure by BP on UK ministers.
The prime minister told MPs he did not believe the documents justified calls for a new inquiry, adding: "The key point to me that emerges from reading the paperwork is this: Insufficient consideration was given to the most basic question of all.
"Was it really right for the British government to 'facilitate' an appeal by the Libyans to the Scottish government in the case of an individual who was convicted of murdering 270 people, including 43 British citizens and 190 Americans, and 19 other nationalities?
"That is, for me, the biggest lesson of this entire affair."
Mr Cameron added: "For my part, I repeat, I believe it was profoundly wrong. The fact that 18 months later the Lockerbie bomber is today living, at liberty, in Tripoli, only serves to underline that."
Gordon Brown, who as Labour prime minister refused to say whether he supported Megrahi's release, said he had made his position clear to Libyan leader Colonel Gaddafi in a letter sent in August 2009.
"I recognised that any decision on Megrahi's release was a quasi-judicial matter, to be made by the Scottish minister alone - and by no-one else," he said in a statement.
"When the issue came to me, I took the view, as the report confirms, that the British government should not pressure or attempt to use influence on this quasi-judicial decision of the Scottish minister."
However, the BBC's Steve Kingstone, in Washington, said: "The US victims' families are sceptical about the institutional firewall between UK and Scottish government decisions. Regardless of what the cabinet secretary says, the Americans draw a direct line between Edinburgh, London and BP's commercial ambition."
New Jersey Senator Robert Menendez said: "The UK didn't just turn a blind eye to al-Megrahi's release - they cut deals that set the terrorist free.
"The UK and Scottish governments' repeated denials, even when confronted by specific and compelling evidence, get more ludicrous by the day.
"It is time that these governments launch independent investigations into the matter and put the wheels in motion to return al-Megrahi to prison."
Meanwhile, the Scottish government has published a series of documents relating to the case.
Holyrood ministers said the UK government papers "bear out the consistency of the Scottish government's position in all respects".
First Minister Alex Salmond said of Sir Gus's report: "I think you can take it that the Scottish government is going to feel a bit vindicated from the cabinet secretary's report.
"The big news of course is that the cabinet secretary has found that at the Autumn of 2008 the UK government, Labour government, changed its position.
"And every area of government were attempting to facilitate the release of Mr al-Megrahi's release to go back home to Libya."
Mr MacAskill has always insisted his controversial decision to release Megrahi was based on the principles of the Scottish justice system and not influenced by any external political or commercial pressures.
Last week, a secret US diplomatic cable obtained by the Wikileaks website and shown to the Daily Telegraph newspaper, cited details of a letter sent by then Foreign Office minister Bill Rammell to his Tripoli counterpart within weeks of Megrahi being diagnosed with cancer in 2008.
It was said to outline "the procedure for obtaining compassionate release".
Mr Rammell said that latest report had "confirmed very clearly" what he previously said.
"At all times in our dealings, we made clear that any decision to release al-Megrahi was exclusively a matter for the Scottish government and we did not pressure or lobby the Scottish government to release Megrahi," said Mr Rammell.