Allan Stewart, who resigned last month, has tabled an amendment to the Criminal Justice (Scotland) Bill calling on ministers to change Scots law to allow a Scottish Lockerbie court to sit abroad. He is the first senior Tory to publicly challenge the Government's handling of the four- year-old case.
Under the amendment, the court, with a Scottish judge and jury, would hear evidence against the Libyan pair and, if convicted, they would serve their sentence in a prison north of the border.
Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah have refused to surrender for trial in Scotland because they fear they would not receive a fair trial. Instead, they have offered to appear before a court in a neutral country.
Last month Douglas Hurd, the Foreign Secretary, rejected a trial overseas. Changing the law would be too time-consuming, he said.
But yesterday Mr Stewart, who has urged Mr Hurd to examine new evidence uncovered by the Independent that the case against Libya is fundamentally flawed, said: "Four years after the charges were laid, we have to find a way out of the present impasse. We can't go on like this. A Scottish court sitting overseas could break the logjam."
Relatives of the 270 people who died in the bombing in December 1988 welcomed Mr Stewart's intervention.
Dr Jim Swire, spokesman for the bereaved UK families, said: "Seven years after the attack, we still don't know why our loved ones died. A trial in a neutral country would help us to uncover the truth."
The amendment will be debated by MPs next week.