David Blunkett is to ask Parliament to change the law after a terrorist suspect was freed from prison on bail.
"G" has been at Belmarsh for more than two years
The home secretary has described the release of an Algerian man with alleged links to al-Qaeda as "extraordinary".
The 35-year-old detainee, known only as "G", had been held at Belmarsh prison without trial for more than two years and was freed on mental health grounds.
Mr Blunkett wants the right to go to the Court of Appeal to fight any similar decisions in future.
Debate on changes
He also wants a second amendment to the Asylum Bill so that terror suspects can be electronically tagged if they are given bail. At present decisions are discretionary.
Both changes are due to be debated in the House of Lords next week
Lord Carlile QC, who is the government's independent reviewer of terrorism legislation, told BBC Radio 4's PM programme: "If what Mr Blunkett is suggesting is that both the government and the detainees should have a right of appeal against the decisions of SIAC to the Court of Appeal, in my view there is nothing wrong with asking for that."
He added that the Special Immigration Appeal Commission's (SIAC) decision to grant bail to G demonstrated that the legislation was working.
SIAC decided "G" should be freed on Thursday on strict bail conditions.
The three judges - appointed to review the cases of foreign nationals held because of suspected terrorist involvement - said that indefinite detention had caused a state of psychosis in "G".
G's BAIL CONDITIONS
'House arrest' does not exist in UK law, instead G faces very strict bail conditions
Can only leave home with police escort
Contact allowed only with wife, daughter, solicitor or doctor
Anyone else must be approved by Home Office in advance
Electronic tag must be worn
Tag monitoring firm must be phoned five times a day
Equipment that can contact outside world - such as computer or mobile phone - banned
Existing land line phone removed and replaced with one supplied by authorities
Access to home must be given to
police, immigration officers and tag monitoring firm
They agreed with Mr Blunkett that the Algerian was dangerous because of his alleged links with al-Qaeda.
However, they argued the risk was manageable if the man was subjected to very strict bail conditions that in effect put him under house arrest.
Mr Blunkett said of the decision: "I have not called it bonkers, but no doubt other people will."
The judges said the man's mental deterioration made it less likely he would become involved in potentially dangerous activity.
"G" will be kept under constant surveillance, can only receive Home Office-approved visitors and will not be allowed access to a telephone or the internet.
The home secretary said this might be satisfactory for people posing a low level risk but not for someone who the judges themselves had agreed could be a threat to life and liberty
"Allowing someone like
this out on bail is an extraordinary decision, which puts massive pressure on our anti-terror and security services," he added.
A spokesman for Tony Blair said: "I think it is only three months ago that SIAC said there was indeed reasonable suspicion that the appellant is an international terrorist within the meaning of [anti-terror legislation] and reasonable belief that his presence in the
UK is a risk to national security."
Mr Blunkett said medical experts who assessed G had concluded that he did not
require psychiatric accommodation.
But Gareth Peirce, the solicitor acting for "G", accused the home secretary of driving her client to madness.
Another prisoner who was held at Belmarsh on suspicion of terrorism has said some of his fellow inmates considered suicide in desperation at being held indefinitely without charge.
SIAC: A SECRET COURT
Some evidence behind closed doors
Appellant not told full case against them
Security-vetted lawyers argue in secret
The former detainee - known as "M" - was released a month ago when judges decided there was no evidence he was linked to terrorism.
Speaking on BBC Radio 4's Today programme, he said: "They (the police) did not question me
once. If I am a suspect of terrorism, if they are thinking maybe I will do
something against this government or this country, why didn't they come to me to
ask me any questions?"
The director of civil rights group Liberty, Shami Chakrabarti, said detaining people without trial showed the government had a "terrifying contempt for the rule of law" and was showing a "complete failure to observe the presumption of innocence".
But Labour MP Andrew Dismore said it was the government's job is to "protect the state and the people who live in the United Kingdom".