The new government thinks that the release of Abdelbaset al-Megrahi, the man convicted of the Lockerbie bombing, was a "mistake".
Sir Nigel Sheinwald, Britain's ambassador to the US, said: "The new British government is clear that Megrahi's release was a mistake.
"The British government deeply regrets the continuing anguish that his release on compassionate grounds has caused the families of Megrahi's victims in the UK, as well as in the US.
"However, under UK law, where Scottish justice issues are devolved to Scotland, it fell solely to the Scottish executive to consider Megrahi's case. Under Scottish law, Megrahi was entitled to be considered for release on compassionate grounds.
"Whilst we disagreed with the decision to release Megrahi, we have to respect the independence of the process. The inquiry by the justice committee of the Scottish parliament concluded in February that the Scottish executive took this decision in good faith, on the basis of the medical evidence available to them at the time, and due process was followed."
His comments came as the US secretary of state Hillary Clinton confirmed that she would investigate claims by a group of senators that BP lobbied the government to release him to help secure an oil deal with Libya.
A hearing on his release will be held on Thursday 29 July by the US senate foreign relations committee. BP officials have been asked to give evidence.