Anti-terror police arrested one of the men during April's raids
Two men suspected of terrorist-related activities have won a landmark High Court battle against government use of secret evidence to deny them bail.
Two judges ruled that a person cannot be denied bail solely on the basis of secret evidence.
Human rights solicitors have described the judgement as a "historic" victory.
Home Secretary Alan Johnson called the ruling "unhelpful" and will seek to appeal. If he fails, the men - branded security risks - could be freed.
Saying he was "surprised and disappointed", Mr Johnson added: "My sole objective is protecting the public and this judgement will make that job harder.
"We will do everything possible to keep this country safe and are taking steps accordingly in the light of this unhelpful judgment."
The ruling represents victory for a Pakistani student facing removal from the UK, who had been refused bail on the basis of secret evidence, and an Algerian national - known as U - whose bail was revoked.
The 23-year-old Pakistani student, referred to as Xc, was one of 10 arrested in April 2009 in north west England.
He was later released by police, but immediately re-arrested and held pending deportation as a "threat to national security".
The judges ruled that bail applications should be treated in the same way as control order cases, where terror suspects must be given an "irreducible minimum" of information about the case against them.
Lord Justice Laws, sitting with Mr Justice Owen, said it was "impossible" to conclude "that in bail cases a less stringent procedural standard is required".
The judges also rejected government claims that decisions by the Special Immigration Appeals Commission, which deals with terror suspect cases, are immune from judicial review.
Jonathan Glasson, appearing for the commission, said the case raised an "important point of principle".
Both Xc and U were "potentially to be released on bail, notwithstanding the existence of closed evidence indicating that they might abscond", he said.
The judges delayed the release of both men to give the Home Secretary time to ask the Court of Appeal to hear the case.
Human rights solicitor Gareth Peirce said: "The judges said there is an absolute, irreducible minimum of information that an individual should have."
Shami Chakrabarti, director of human rights campaign group Liberty, said: "Yet again it takes a senior judge to point out what most people already know - if the government is going to lock you up, it needs to tell you why."
"The hard lesson of recent years is that diluting Britain's core values and abandoning justice makes us both less safe and free."
In June, Law Lords ruled that use of secret evidence to support imposition of control orders - which restrict suspects' movements with home curfews and electronic tags - was unfair.
And in September, Mr Johnson released a suspect from such an order because he did not want to disclose secret intelligence.