The Libyan killer of a British policewoman will never be brought to justice in Britain after a secret deal approved by Jack Straw.

The Foreign Office bowed to Libyan pressure and agreed that Britain would abandon any attempt to try the murderer of WPC Yvonne Fletcher, shot outside the Libyan embassy in London 25 years ago.

Anthony Layden, Britain’s former ambassador to Libya, said this weekend he had signed the agreement with the Libyan government three years ago, when Straw was foreign secretary. At the time Britain was negotiating trade deals worth hundreds of millions of pounds with Libya.

The deal followed a visit by Tony Blair, then prime minister, to meet Colonel Gadaffi in March 2004 after Libya announced that it was ending its nuclear weapons programme.

The disclosure will provoke criticism of the government after the row over the early release of Abdelbaset Ali Mohmed al-Megrahi, the terminally ill Lockerbie bomber. Yesterday his son-in-law said his health was deteriorating markedly.

The Foreign Office said the deal had been sealed in an exchange of ambassadors’ letters in 2006: “The Fletcher family know all this and have not considered it to be a big issue.”

However, Queenie Fletcher, mother of Yvonne, said yesterday she had not been told about a deal. “They should have informed us. We were never told they’d agreed to this. No, never,” she said. Yvonne’s sister Heather said the family had known that any trial would probably happen in Libya.

Daniel Kawczynski, a Tory MP who met David Miliband, the foreign secretary, last week with a member of the Fletcher family to discuss the police investigation into the murder, said Miliband had told them nothing about the deal.

Kawczynski, MP for Shrewsbury, said: “None of this was mentioned. I think they deliberately misled us. I find it extraordinary that the Foreign Office have tried to mislead myself and the Fletcher family.”

Under pressure the Libyans have reluctantly co-operated with Scotland Yard detectives investigating the murder.

They have now suspended any assistance pending their own questioning of David Shayler, a former MI5 officer who claimed there was a British-backed plot to kill Gadaffi. Shayler is now a tranvestite living in a squat in Surrey.

Peter Smyth, chairman of the Metropolitan Police Federation, said: “I was certainly not aware of that arrangement and I would absolutely deplore it.”

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