Shafiq ur Rehman, 28, a minister in Oldham, Lancashire, is appealing against a Home Office deportation order served last year on the grounds of national security.

His lawyers have told a London tribunal that the deportation order was to punish Mr Rehman for his refusal to become an informer for MI5.

And they said Home Secretary Jack Straw knew that Mr Rehman had rejected a series of advances by MI5 recruitment officers when he signed the deportation order in 1998.

Photos of weapons said to be in a diary belonging to the cleric

On Tuesday, Susan Hadland, then assistant director of the Home Office immigration and nationality directorate, denied the claims of retaliation. She had presented Mr Straw with MI5's case for deporting Mr Rehman.

"I would accept that the approach was part of the case put to the secretary of state but it was not a significant part," she said.

"I think I can take the Security Service to be big enough to take the fact that not everybody will wish to work on their behalf.

"The decision to deport Mr Rehman was certainly not from a fit of pique because he refused to become an informer."

Mr Rehman works at this mosque in Oldham

The government has accused Mr Rehman of leading the UK branch of an extremist Islamic organisation that recruits and trains British Muslims in Pakistan for terrorist activities in Kashmir.

It also says Mr Rehman has raised thousands of pounds for the extremist Lashkar Tayyaba group.

But on Tuesday Mr Rehman denied directly supplying funds for terrorist purposes - although he confirmed that he believed in the justice of pursuing a jihad (holy war) in Kashmir.

He told the hearing that "atrocities" by Indian forces in the disputed territory had led to a feeling among British Muslims, including himself, that armed action should be met with "moral" support.

Asked about the nature of his support for LT, he added: "There is moral support for LT and we pray for them but money sent to Pakistan is specifically targeted for the peaceful purposes for which it has been sent."

Terrorist involvement denied

The cleric confirmed that he had raised money to be sent to the related organisation Markax Dawa-ul-Irshad, which he described as a political and cultural organisation running schools, universities and hospitals in Pakistan.

He added he was aware of a connection between MDI and LT, but had not been involved with LT.

He also admitted supplying references for up to seven young British Muslims wishing to travel to Pakistan to attend courses in Muslim teachings, including the doctrine of jihad, but denied this was recruitment.

"It is normal for the Imam in a foreign country to supply a reference for those travelling to Pakistan to attend these courses," he said.