AN is one of three test cases which went to the House of Lords
The government's anti-terror strategy has suffered a blow after the High Court revoked the control order of a suspect accused of links to al-Qaeda.
The ruling comes after the Law Lords said terror suspects held on house arrest-style conditions must be allowed a better idea of the case against them.
Mr Justice Mitting revoked the order against a British man, known as AN.
It comes after Home Secretary Alan Johnson chose to drop part of the case against AN rather than reveal it.
AN's case was the first of three set to be re-heard at the High Court after the Law Lords' decision.
The High Court heard that Mr Johnson was already taking steps to make a new order - which AN will not be able to challenge before the autumn.
Revoking the order, Mr Justice Mitting said that because the evidence against AN had not been disclosed, he had been left not knowing the "essence" of the case against him.
This meant that the initial decision to impose the control order had been "flawed".
The judge stressed that he had not ruled that the secret evidence, which he had read, was in anyway unreliable.
Earlier this year nine Law Lords unanimously ruled that while the restrictions to liberty were reasonable, suspects had a right to understand the allegations they face so they could mount a proper defence.
Dominic Casciani, BBC home affairs correspondent
On the face of it, this judgement at the High Court looks like it's good news for the terror suspect, known only as AN, and bad news for the home secretary.
But the government has in fact succeeded in defending control orders despite predictions they were doomed.
The Law Lords, driven by the European Court, say more secret evidence must be revealed in cases like this terror suspect.
But the Home Office has swerved around the controversy of closed material by withdrawing its old case - and seeking a new order on different terms. So despite winning, the suspect is in the same place as before.
This man will challenge the new order - and the High Court will, in essence, hear all the same arguments again. The Lords' judgement shifted the balance towards suspects' rights - but we're a long way from the tipping point.
The government uses secret intelligence material to impose control orders against terrorism suspects if the police do not have enough evidence to charge the individual with a crime.
AN, one of the three test cases that went to the Lords, was placed on a control order in July 2007.
The home secretary alleged the 27-year-old British man was linked to al-Qaeda and had plotted terrorism overseas, including in Iraq.
The suspect is currently in Belmarsh high security prison awaiting trial for allegedly breaching his control order.
His lawyers say he has twice attempted suicide.
In earlier hearings, counsel for the home secretary said that AN had sufficient opportunity to challenge his restrictions thanks to six paragraphs of allegations placed in the public domain.
But the home secretary then withdrew some of the case when told by the court that more information needed to be made public.
Gareth Peirce, solicitor for AN, said that her client was back at square one.
But a spokesman for the Home Office said: "We argued strongly in court that the current control order should remain in force but the judge found that, although the control order had been properly made, it should now be revoked.
"We consider that there remain grounds for a control order and have been granted permission by the court to make a new one."
Liberal Democrat home affairs spokesman Chris Huhne said the court's decision was "a further blow to the government's illiberal control orders regime" and called for them to scrapped.
"The ruling has pointed out what ministers should have already known - that it is unacceptable to restrict people's liberty without telling them why," he said.
Shami Chakrabarti, director of human rights group Liberty, said on Friday: "Today's farcical proceedings highlight the nightmare of control orders and the "heads we win; tails you lose" Home Office idea of justice."
The two other control orders which went to the Law Lords are yet to return to court for full hearings on the details of their secret evidence.