Complaints against the police by a man arrested under the Terrorism Act are "unsubstantiated", the watchdog said.
Babar Ahmad is wanted in the US to face terror charges
Babar Ahmad accused police of fabricating evidence and "desecrating" his copy of the Koran by putting it on the floor during a search at his home.
He was arrested by Metropolitan Police officers in December 2003 and released without charge six days later.
The Independent Police Complaints Commission dismissed Mr Ahmad's claims but made a number of recommendations.
Mr Ahmad is currently fighting extradition to the US on charges of running websites inciting murder, and raising money for the Taleban.
The complaints relate to his arrest by Metropolitan Police officers at his home in Tooting, south London.
He alleged police conspired to pervert the course of justice, fabricated intelligence reports and desecrated his copy of the Koran, by putting it on the floor as they searched his home.
The IPCC investigation concluded that none of Mr Ahmad's complaints were substantiated.
IPCC Commissioner Nicola Williams said: "I am confident that we have conducted a thorough investigation into these complaints.
"Whilst these were unsubstantiated, we have made a number of recommendations that I believe would improve safeguards in operations of this nature."
The recommendations relate to how police conduct briefings before major operations.
In November 2006 Mr Ahmad and Haroon Aswat, from Yorkshire, lost their High Court battle to avoid extradition to the US. Their lawyers are trying to take the case to the House of Lords.