The Church of Scotland has praised the decision by the Justice Minister, Kenny MacAskill, which means the Lockerbie bomber, Abdelbaset Ali al-Megrahi, has been released from prison on compassionate grounds.

But there are deep frustrations that the end of al-Megrahi's appeal and his release will now allow the British government and the Libyan authorities to get away with what some believe to be a cover-up over the true circumstances of the terror tragedy in December 1988.

The Rev Ian Galloway, convener of the Kirk's Church and Society Council, commented: “This decision has sent a message to the world about what it is to be Scottish. We are defined as a nation by how we treat those who have chosen to hurt us. Do we choose mercy even when they did not chose mercy?"

"This was not about whether one man was guilty or innocent," he added. "Nor is it about whether he had a right to mercy but whether we as a nation, despite the continuing pain of many, are willing to be merciful."

Rev Galloway went on: "I understand the deep anger and grief that still grips the souls of the victims’ families and I respect their views. But to them I would say justice is not lost in acting in mercy. Instead, our deepest humanity is expressed for the better. To choose mercy is the tough choice and today our nation met that challenge."

He concluded: "We have gained something significant as a nation by this decision. It is a defining moment for all of us.”

The decision by the Scottish Justice Minister follows the decision by al-Megrahi's lawyers to abandon the appeal against his conviction.

Megrahi has always strongly protested his innocence and legal rights activists are concerned that the basis of his conviction is not sound.

Many relatives of those killed by the bombing in Britain also have doubts over the conviction and wanted the appeal to go ahead so that evidence which the courts have not seen could be brought forward and more material would be put into the public domain.

But the families of US victims were adamant that the appeal should be rejected and al-Megrahi kept in prison, in spite of the concerns and his terminal illness.

There are now moves to seek a formal public enquiry into the events surrounding the bombing and the court proceedings. But the government has announced that it will resist these.

Sceptics believe it has much to hide in its own dealings with the Libyan government, particularly in relation to the release of oil reserves.

British relatives of the victims of the Lockerbie disaster said two days ago they feared vital evidence that could shed more light on the attack would remain hidden after the courts in Scotland granted Megrahi's request to drop his appeal.

The families of some of the people who were killed in the attack had hoped the hearings, granted by the Scottish authorities after a three-year investigation, would uncover new details about the bombing that killed 270 people.

"This is the worst possible decision for the relatives," said Pamela Dix, whose brother Peter was killed on board Pan Am flight 103 which exploded as it flew over Lockerbie on 21 December 1988.

She added: "There now seems little chance of this evidence being heard and scrutinised in public."

The Rev John Mosey, who lost his 19-year-old daughter, Helga, in the tragedy, called the appeal decision "incredibly frustrating" but not unexpected.

He said: "The relatives of those who died have been denied access to the evidence that was uncovered by a three-year investigation by the Scottish criminal cases review commission. Unfortunately, it is what we expected from the beginning because the authorities – in Scotland, London and Washington – do not want any more information on this coming out."

Jean Berkley, whose son Alistair died in the bombing, agreed the decision was a blow but said the focus would now shift to getting a full independent inquiry.

"The families are used to setbacks so we will continue the campaign, but this is difficult because people set lots of store by the appeal and now we are not going to hear the evidence that persuaded the [commission] to grant the hearing in the first place."

Alistair's brother, Matt, said: "Many people with a deep understanding of this case have serious concerns about it which are unlikely to go away."