The foreign secretary has condemned the US decision to refuse an extradition request for the suspect charged with causing the death of Harry Dunn, saying the UK would have “acted differently”.

Harry Dunn died after a crash outside a US military base in Croughton, Northamptonshire, on 27 August 2019.

Anne Sacoolas, 42, was charged with causing his death by dangerous driving in December but she left the UK days afterwards when the US government claimed she had diplomatic immunity. Sacoolas is the wife of an intelligence officer based in Croughton.

Revealing he had already protested to the US ambassador, Woody Johnson, Dominic Raab said: “We feel this amounts to a denial of justice, and we believe Anne Sacoolas should return to the UK. We are now urgently considering our options. I also explained that the UK would have acted differently if this had been a UK diplomat serving in the US.

“I emphasised that work to improve road safety on and around the Croughton base must continue, and the need to resolve the issue whereby family members at RAF Croughton are immune from criminal prosecution.”

The business secretary, Andrea Leadsom, who is the constituency MP for the Dunn family, insisted: “Diplomatic immunity should not be at play here. The person who has been charged by the CPS must be brought back the UK to stand trial. We stand shoulder to shoulder with Harry’s family to get justice done.” Leadsom is due to meet Johnson on Friday.

The US informed the Home Office that it had rejected the extradition request late on Thursday, in a move that will renew controversy over imbalance in the US-UK extradition treaty, as well as the potential misuse of diplomatic immunity.

A 1995 treaty between the UK and US covering the Croughton base has been interpreted by the US as giving diplomatic immunity to all family and staff at the base including Sacoolas, even though she is not a diplomat but the wife of an intelligence agent on the site. She returned to the US after the crash, and the extent of co-operation by British officials in her departure is one of many controversies of the case. The Foreign Office (FCO) says the diplomatic immunity issue no longer arises now that she is in the US.

The Dunn family lawyers were surprised by the speed of the US’s decision, which they said showed it had been taken at a political level, short circuiting the legal process.

Dunn’s mother, Charlotte Charles, said she would keep fighting. “It doesn’t matter when, whether it’s this administration or the next. The extradition request is always going to be over Anna Sacoolas’s head, and we’re never going to give up.”

The former head of special crime at the CPS and liaison prosecutor in Washington DC suggested the UK government had few options. He said: “The law of diplomatic immunity in this area is not completely clear hence the confusion over whether diplomatic immunity applied immediately after Sacoolas left the UK. The UK and US have interpreted the law differently here, and there is no court in which that dispute can be resolved.”

A spokesman for the Dunn family said Donald Trump had been determined to protect Sacoolas from the outset and said it was the first time the US had rejected such an extradition request by the UK.

Radd Seiger, the family spokesman, said: “This administration is behaving lawlessly and taking a wrecking ball to one of the greatest alliances in the world. This is a lawless, corrupt administration that appears intent on attacking even its closest international ally.”

The family are seeking judicial review over how the FCO handled the case. Boris Johnson had foreshadowed the decision in a new year interview but politically it is a blow to his claim, before trade talks, that a close political relationship with Trump would bring the UK privileged results.

In its statement refusing the UK extradition request, the US state department said Sacoolas had immunity from criminal jurisdiction throughout her stay in the UK.

“If the United States were to grant the UK’s extradition request, it would render the invocation of diplomatic immunity a practical nullity and would set an extraordinarily troubling precedent,” it said.

The US president has called the crash a “terrible accident”, saying it is common for Americans in Britain to have difficulty driving on the left side of the road.

The Dunn family, who have met Trump in the White House to discuss their plight, had been a seeking judicial review of the claim Sacoolas had diplomatic immunity, arguing the agreement between the UK and US over the base either did not give staff that status or that if it did, the agreement was in breach of the Vienna convention covering diplomatic immunity.

The FCO said it will seek costs against the Dunn family over any judicial review since it is normal to protect taxpayers’ money in this way. The Dunn family said the costs threat is an attempt to suppress their attempts to find the truth, including the interactions between the Foreign Office, the US embassy and Northamptonshire police.

Reacting to Raab’s comments on the extradition, the family spokesman criticised the UK for still seeking to impose the costs on the family of any judicial review into the case.