LONDON — The Libyan convicted of the Lockerbie bombing could be allowed to fly home to die this week, 21 years after the atrocity plunged Libya’s ties with the West into a prolonged standoff.

But the return of Abdelbaset Ali Mohmet al-Megrahi — whether released on compassionate grounds or transferred to a Libyan jail — has revived intense emotions, and diplomatic strains, despite the warming ties of recent years.

The former Libyan agent, who is dying of prostate cancer, is in a Scottish jail serving 27 years for killing 270 people when a Pan Am jet exploded over the Scottish village of Lockerbie on the night of December 21, 1988.

But reports suggest he could now be heading home — and if he is released, it would be the most powerful symbol yet of the thawing of relations between Libya and Britain, arch-enemies in the 1980s and 1990s.

However, the news has caused anger in the United States, where the Obama administration wants Megrahi to serve out his full prison sentence, while a senior senator says any release could test US-Libyan relations.

A release would come in the wake of months of negotiations and in time for Libyan leader Moammar Kadhafi to burnish his position as he marks 40 years since seizing power on September 1, experts say.

“The fact that it’s all going to be put into place before September 1 is no coincidence on the Libyan side,’’ Molly Tarhuni, an expert at Chatham House, the London-based international affairs think-tank, told AFP.

Britain suspended diplomatic ties with Libya in 1984 after a policewoman was shot dead outside the Libyan embassy in London.

They resumed in 1999 after Libya handed over Megrahi and another suspect for the Lockerbie trial.

Relations gradually warmed further after Tripoli renounced weapons of mass destruction in 2003 and agreed to pay 270 million dollars in compensation to Lockerbie relatives.

Experts say there are two main incentives for getting back to doing business with such an unpredictable partner.

The first is security, with Libya offering assistance in countering Islamic extremism and Kadhafi speaking out against fundamentalism, and the second is oil.

Libya has the largest proven oil reserves of any country in Africa, much of it still untapped, and British firms including BP and Shell have signed major exploration deals in the country in recent years.

Some commentators suggest Libya may have used this card to pressure Britain over Megrahi, threatening business interests including BP.