David Blunkett has lost his legal bid to stop an Algerian terror
suspect being released on bail.
"G" is being held at Belmarsh prison in London
The detainee, known only as "G", has been held without charge or trial since December 2001 and claims his open-ended detention is making him mentally ill.
The Home Secretary had claimed G's mental condition was not serious.
But the Special Immigration Appeal Commission (SIAC) upheld its January ruling that the 35-year-old should be freed on bail under house arrest.
The commission agreed with Home Secretary David Blunkett that the Algerian was dangerous because of his alleged links with al-Qaeda.
However, it argued the risk was manageable if the man was kept under conditions of virtual house arrest.
He will be under constant surveillance, can only receive Home Office approved visitors and will not be allowed access to a telephone or the internet.
The judges said the man's mental deterioration made it less likely he would become involved in potentially dangerous activity.