(Adds Jim Swire comment, paragraph 10)

By Jeremy Lovell

LONDON, June 7 (Reuters) - Britain said on Thursday it had signed a deal on judicial cooperation with Libya, but it would not immediately lead to convicted Lockerbie bomber Abdel-Basset al-Megrahi being sent home to Libya to finish his life sentence.

Prime Minister Tony Blair's office denied that Megrahi, serving life in Scotland for murdering 270 people with the bomb that blew up Pan Am Flight 103 over the Scottish town of Lockerbie on Dec. 21, 1988, would be going home.

"Wrong. Not true," Blair's spokesman told reporters at the G8 summit in Germany after news of the memorandum sparked speculation about Megrahi's imminent repatriation.

"Separately, we are discussing a memorandum of understanding with Libya but that would not affect this case," he added.

After a tortuous legal and diplomatic process, Megrahi was handed over, convicted and sentenced to life in January 2001 by a Scottish court sitting in the Netherlands.

He was moved in 2005 from solitary confinement in Glasgow's Barlinnie prison to Greenock where he was expected to serve the remainder of his sentence.

The memorandum was signed in Sirte in Libya on May 29 at the start of Blair's farewell tour of Africa but, contrary to usual practice, was accompanied by no fanfare.

The Foreign Office said the memorandum committed both sides to start negotiations soon and conclude them within a year.

Subjects to be included were cooperation on criminal, civil and commercial law, extradition and prisoner transfer.

Jim Swire, whose daughter Flora was killed on the flight and who speaks on behalf of other British victims, said he could not believe the deal would specifically exclude Megrahi.

Scottish Premier Alex Salmond said Megrahi's case was under review by the Scottish Criminal Cases Review Commission which might result in it going back to appeal, but he insisted that the memorandum of understanding had no bearing on that process.

And the newly elected premier, who is at loggerheads with London, complained that the Scottish Executive had been kept in the dark over the memorandum until it had been signed.

A Foreign Office spokesman said the memorandum had been signed as part of the process of normalisation of ties with former pariah Libya that had been under way since it renounced weapons of mass destruction in December 2003.

He said it did not mention Megrahi by name but that because it would cover Libyan prisoners in Britain his case could come up at some stage. (Additional reporting by Katherine Baldwin in Heiligendamm, Germany)

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