Peter Mandelson was plunged into a fresh row yesterday after it emerged he met Colonel Gaddafi's son at a rich friend's villa.

Saif al-Islam Gaddafi was a fellow guest of the Rothschild family in Corfu just a week before news broke that the Libyan jailed for the Lockerbie bombing could be freed.

The Business Secretary's spokesman said he had a "fleeting conversation" with the Libyan president's son about the Abdelbaset Ali al-Megrahi case but said Lord Mandelson made it clear it was a matter for the Scottish government.

However, he was slammed for mixing his professional and private life. Lib Dem MP Norman Baker said: "You can judge the character of someone by the company he keeps."

Tories accused Alistair Darling of "shoring up his Edinburgh vote" by spending most of his week as acting PM in Scotland.