Yesterday, Scotland's high court agreed that Megrahi could drop his appeal against conviction.
Scottish Justice Secretary Kenny MacAskill is considering several options for Megrahi, who was jailed for killing 270 people in 1988.
The White House said late yesterday that Megrahi, the only person convicted of blowing-up Pan Am Flight 103 over the Scottish town of Lockerbie, should remain in jail.
'It's the policy of this administration as enunciated...by Secretary of State (Hillary) Clinton, that this individual should serve out his term where he's serving it right now,' said White House spokesman Robert Gibbs.
Mr MacAskill has several options. He could move him to a Libyan jail, free him on compassionate grounds or keep him in a Scottish prison.
Lawyers for the former Libyan agent, who has terminal cancer, told the court that he was 'very weak,' adding: 'He is suffering from severe pain and he is in distress.
'His absolute priority is to die surrounded by his family,' said lawyer Maggie Scott.
But Megrahi can only be sent home under a prisoner transfer agreement when there are no legal matters involving him outstanding and there is still an appeal by the authorities against the leniency of his sentence to be resolved.
This issue is in principle expected to be decided at another court hearing scheduled for 8 September.
As yesterday's hearing took place, Scottish ministers met separately and discussed whether to grant freedom on compassionate grounds to Megrahi, who was sentenced in 2001 to 27 years in prison.
Afterwards a government spokeswoman said that Mr MacAskill 'briefly updated colleagues on the situation simply to confirm that he received the full material from officials on Friday and that he received and listened to representations from those who have relevant interest.
'He will make his decision by the end of the month,' she added.
Scotland's first minister Alex Salmond insisted that 'international power politics' would not influence the decision on Megrahi's fate, which would be taken 'on the evidence, in the interest of justice'.
The US pressure was underlined by a letter from seven US senators demanding he complete his sentence.
