The meeting was the second between the two men and is thought to have been called to reach an agreement which would enable the accused to be tried in Scotland, thus paving the way for improved relations between Libya and Britain.
Last night Sir Teddy confirmed that the meeting, which happened in November, took place but he refused to comment further: 'I am sad news of the meeting has leaked out and concerned that the prospects for its success may have been undermined.'
Middle East observers believe Libya, anxious to avoid a further tightening of sanctions, wants to improve its relationship with the West. Deadlock between the two sides has continued because of Libya's refusal to hand over two nationals accused of the Lockerbie bombing in which 270 people died when Pan Am flight 103 was attacked in December 1988.
The Libyan government's public stance is that the accused - Abdel Baset Ali Mohamed al- Meghrahi and al-Amin Khalifa Fhimah - would not get a fair trial in Britain or the US.
It emerged yesterday that a possible face-saving formula had been devised which would involve the two men agreeing to come to Scotland of their own volition and without the official blessing of the Libyan government.
The accused would be seen to be leaving an incoming flight at Edinburgh airport unhindered by handcuffs or a police escort. Having emphasised in this way that the men had freely surrendered, their arrest would take place on the ground so that a trial could take place.
The Foreign Office yesterday denied any knowledge of negotiations with the Libyans. A spokesman said: 'We will continue to work to ensure compliance with the UN resolutions.'