Babar Ahmad said he had been beaten and dragged by handcuffs
The Metropolitan Police have agreed to pay £60,000 damages to a man arrested during an anti-terror raid.
The High Court heard that Babar Ahmad was subjected to "serious gratuitous prolonged unjustified violence" and "religious abuse" after his arrest.
Mr Ahmad, a 34-year-old IT support analyst, was never charged following the dawn raid at his home in Tooting, south west London, in December 2003.
He is now in jail awaiting extradition to the US on separate charges.
'Humiliate and debase'
Mr Justice Holroyde heard that one of the unnamed officers allegedly involved will face criminal proceedings.
Phillippa Kaufmann, counsel for Mr Ahmad, told the High Court that he had been dragged by handcuffs and held by the neck.
It was also claimed that he was forced into a kneeling Muslim prayer position and asked: "Where is your God now?"
She added his treatment at the hands of Territorial Support Group officers was intended to humiliate and debase him and make him fear for his life.
Previously, the force had denied that Mr Ahmad had been punched, stamped on, grabbed and pulled by the testicles and repeatedly struck with the knee in the police van.
This abuse took place not in Guantanamo Bay or a secret torture chamber but in Tooting
Statement on behalf of Babar Ahmad
The court heard that one officer told him as he was being beaten in the police van: "You'll remember this day for the rest of your life."
A spokesman for the Met Police said: "The police are duty-bound to act on information that identifies a real and serious terrorism threat to the safety of the public and it is a regrettable consequence of such operations that force may need to be used.
"However, we recognise any use of force must be proportionate and reasonable."
Mr Ahmad was in court to hear lawyers for Met Commissioner Sir Paul Stephenson agree to the pay-out.
Previously, he had followed proceedings by videolink from Long Lartin prison, Worcestershire.
He had been due to give evidence on Wednesday.
Mr Ahmad's wife Maryam said she was "delighted" at the decision, which she said was the result of a "long and hard-fought campaign".
In a statement, Mr Ahmad's family claimed he was so badly injured after his release from police custody that "we could not even embrace him".
The alleged taunt, "Where is your God now?" was an attack "on every single Muslim in the world", they said.
BARBAR AHMAD: TIMELINE
Dec 2003: Arrested under anti-terror laws and released without charge
Jul 2004: Assault claims passed to Crown Prosecution Service
Aug 2004: Arrested under anti-terror laws
Oct 2004: Charged with terror crimes by US court
May 2005: British judge rules he can be extradited to US
Jul 2006: Challenges extradition
Nov 2006: Loses extradition challenge
Feb 2007: Abuse claims rejected by IPCC
Mar 2009: Sues Met Police for assault
Mr Ahmad's brother-in-law, Fahad Ahmad, read out a statement on his relative's behalf in which he said he intended to concentrate on fighting his extradition.
The statement said: "This abuse took place not in Guantanamo Bay or a secret torture chamber but in Tooting, south London.
"I would like to thank my family and all who have supported me and my campaign for justice, particularly my legal team who have spent many years fighting for me."
An Independent Police Complaints Commission investigation in 2007 ended with no action being taken against any officer.
The Islamic Human Rights Commission has called for a new full independent inquiry into what it claims is the "systematic failure" of the authorities in carrying out "their functions without bias".
Mr Ahmad is separately accused of raising money to support terrorism in Chechnya and Afghanistan via websites and e-mails.
US investigators claim he was behind the website azzam.com which was one of the most well-known terrorist fundraising sites on the internet at one point.
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