The revelation came at a special immigration hearing into the case of 28-year-old Shafiq ur Rehman.

The Oldham mosque where Shafiq ur Rehman is based

The Home Office claims the Oldham cleric has been recruiting and training British Muslims to fight for an independent Kashmir, and wants to deport him as a terrorist.

But at a hearing in London, MI5 and Special Branch officers admitted they had tried to recruit him as an informant.

The leader of the Muslim parliament, Dr Siddiqui, has demanded an assurance from the Home Secretary Jack Straw, that the practice will stop immediately.

Dr Siddiqui described it as a sacrilege and said that he believed other Muslim clerics could be working for MI5

Exportation hearing

The deportation hearing will end on Friday with an oral judgement being given to the Home Office only.

The BBC's Jon Silverman reports: "He won't be told the verdict for several weeks"

Mr Rehman's lawyers said they were horrifed they would be kept in dark about the ruling for several weeks, claiming such a move breached their client's rights.

Earlier in the hearing, security service investigators alleged that Mr Rehman directly raised funds for the Lashkar Tayyaba (LT) Mujahideen group, which is fighting a Jihad or holy war in Kashmir, while working in Britain for its political wing, MDI.

Rehman, who came to Britain in 1993, admitted to providing cash for MDI - or Centre for Invitation to the Divine Teachings - but insisted that the money was for building schools, hospitals and welfare handouts in his native Pakistan.

Addressing the three-man tribunal panel, Sibghat Kadri QC, representing the cleric said: "We ask you to conclude that Mr Rehman is not a terrorist.

"He might have been naive about MDI and accepting assurances that the money he sent was not for LT. But he believes that terrorism is evil, that any terrorist activity which affects England is wrong."