Tony Blair is facing the threat of legal action over his alleged intervention in a multi-million pound compensation claim by British victims of IRA terrorism.
Lawyers for around 200 victims say the former prime minister and other government officials appeared to have "connived" with Colonel Muammar Gaddafi to block their claim against the Libyan regime that supplied Semtex for the attacks.
They accuse Mr Blair of assisting a rogue regime to kill off their class action in a "scandalous and perverse" move and are considering taking both the former prime minister and the government to court in the UK. The lawyers are also demanding to know whether Vincent Fean, a former ambassador to Libya, "misled" MPs and peers over government involvement in the case.
UK newspapers have seen an email that appears to show that Mr Blair intervened on behalf of Colonel Gaddafi in a long-running legal row over compensation for victims of Libyan-sponsored terrorism.
The email suggests Mr Blair helped to broker an agreement between the former Libyan leader and President George W Bush in which Libya paid £1bn in compensation to American victims of terrorism but effectively ended the compensation hopes of the British victims of IRA attacks, who had been pursuing Gaddafi through the US courts.
Jason McCue of McCue & Partners, which is representing around 200 British victims of IRA attacks carried out with Semtex supplied by Libya, said the disclosure could form the basis for legal action in Britain. "It's bad enough being a victim of Semtex bombs supplied by Libya for the Provisional IRA campaign. [But] it's sheer horror then to be informed that the British government and Tony Blair may have connived with Gaddafi to ensure the few brave British victims that justly sued and stood up to the dictator received no compensation from the Libyans," he said.
"The families' lawyers are investigating causes of action against those that might have interfered in litigation to the detriment of UK victims and for the benefit of a rogue dictator such as Gaddafi."
Colin Parry, whose son Tim, 12, died when a Semtex bomb exploded in Warrington town centre, said: "The whole thing is grubby to say the least. "It seems to me a dereliction of duty on the part of the British government in looking after the rights of British citizens."
The claims by Mr McCue and his clients arise from an email written by Mr Fean to Mr Blair's aides on June 8, 2008, two days before a meeting between the former prime minister and Gaddafi.
The note described how Mr Blair had approached President Bush on Gaddafi's behalf following an American court ruling that the proceeds of Libyan business deals could be seized to compensate victims of a Libyan terrorist attack.
A spokesman for Mr Blair insisted there was no evidence to suggest the former PM had intervened in the compensation case. "This persistent attempt, backed by no evidence whatever, to suggest that Tony Blair 'interfered' with the terms of compensation is wrong," she said.
The UK Foreign Office said: "The government believes compensation claims are best pursued directly with the Libyan government through private campaigns. The claim that government officials took any deliberate action that denied other UK victims compensation is wrong."