By Matthew Davis
BBC News, Washington
The case of Jose Padilla cuts to the heart of the American debate over the limits of the president's authority in conducting the war on terror.
Jose Padilla was arrested at Chicago airport in May 2002
Mr Padilla has been held in military custody for the last three years as an enemy combatant - one of only two US citizens to be so designated.
Until now President Bush had resisted calls to try him in a civilian court.
But the administration has changed tack, just as Mr Padilla's lawyers were to take the issue to the Supreme Court.
Some say the administration wanted to avoid a potentially embarrassing court battle over how long the government could hold a US citizen without charges.
But the Padilla case is just one area where the extent of the state's authority in time of war is under scrutiny.
Congress is currently wrangling over the extension of provisions in the Patriot Act that give the FBI and other agencies unprecedented power to tap phones, search records and otherwise investigate citizens suspected of terror links.
Early next year the Supreme Court will rule on whether military commissions can be used to try Guantanamo Bay detainees charged with terrorist offences, as Mr Bush wants.
Meanwhile, the president has come in for criticism over a threat to veto a proposal to ban all inhumane treatment of detainees held by the United States.
And in recent weeks there has been international uproar at reports that the CIA set up so-called "black sites" in eastern Europe and Asia to hold suspected terrorists far from public scrutiny.
'Trained as terrorist'
The Padilla case itself has been a long-running thorn in the administration's side.
Mr Padilla, also known as Abdullah al-Muhajiya, was arrested at O'Hare airport in Chicago in 2002 on his way back from Pakistan.
On his arrest, federal agents said he had been trained in weapons and explosives by members of al-Qaeda in Afghanistan and had been planning to detonate a radioactive device, or so-called dirty bomb, in the US.
Significantly, none of those allegations made it to the indictment unveiled on Tuesday.
Instead, Mr Padilla was added to an existing indictment against an alleged US and Canada based terror cell
charged with plotting attacks overseas.
The indictment alleges that Mr Padilla and Canadian national Kassem Daher conspired with previously charged defendants Adham Hassoun, Mohomed Youssef, and Kifah Jayyousi to help terrorist groups in
Afghanistan and elsewhere.
It alleges they conspired to send money, physical assets and mujahideen recruits to jihadists in Somalia, Libya, Chechnya and Kosovo.
And the indictment says Mr Padilla, 35, went to Egypt and Afghanistan to train as a terrorist.
He could go to jail for life if convicted.
Case 'still alive'
Steven Shapiro, national legal director of the American Civil Liberties Union, told the BBC it was clear from the timing of the indictment's announcement that the government was "anxious to avoid a Supreme Court battle they were worried of losing".
"But it does not change the fact that the military detention was unjustified and unlawful," he said.
"This case is another clear example of the executive over-reaching its authority and underscores our concern that the administration is too willing to abandon the rule of law."
The administration says it needs flexibility in dealing with the war on terror and protecting the American people from attacks at home, and that terrorists cannot be treated as if they are just another criminal defendant.
If lawyers for Mr Padilla are right that the case is "still alive", the Supreme Court may still have to take a view on the president's power to hold US citizens indefinitely, despite the indictment.
Even if it does not, the case will continue to highlight fears about terrorism on American soil - and just how far the administration can go in dealing with them.