The suspect filmed tube stations as he travelled around London
Police have released footage which they say was made by a suspected terror cell filming potential targets.
They believe an Algerian gang was conducting reconnaissance for a plot to target train stations in London.
It was released amid a continuing row with photographers over the rights to take pictures in public places.
Previous terror cases have involved potential bombers who filmed targets, but campaigners say terror laws are being use to harass photographers.
City of London Police released the footage of what it called "hostile reconnaissance" to illustrate why police may stop photographers.
The footage was recorded on a man's mobile phone as he travelled around London in July, 2008. Five men were arrested after he was caught filming and acting suspiciously at Liverpool Street station, police said.
The footage showed him examining Oxford Circus, Mornington Crescent and Camden Town Tube stations. He had filmed underground maps and lifts, CCTV cameras, entrances and exits of stations.
Extensive footage was also recorded at Liverpool Street railway station and at the Broadgate Circle shopping and restaurant plaza.
Police discovered the gang also visited shopping centres in Hatfield, Hertfordshire, Bluewater in Kent, and Bridgend, south Wales.
Two men were subsequently convicted of a huge mobile phone and luxury goods fraud scam and deported after serving prison sentences.
The 7/7 bombers conduct reconaissance a week before the attacks
The police said the CPS had decided there was sufficient evidence to bring terrorism charges, but it was not in the public interest because they would have received the same sentence as for fraud.
Police believe the men may have been a fundraising and research arm of an al Qaeda-linked group in North Africa.
Det Supt Chris Greany, head of counter-terrorism at City of London Police, said: "Hostile reconnaissance footage is a tradable commodity within terrorist circles.
"The actual attack team do not have to expose themselves to the risk of being disrupted. We want to set a balance between the challenges of policing and legitimate photography by tourists and the media."
Police discovered that the 7 July 2005 London suicide bombers carried out reconnaissance of the Underground trains network prior to their attacks, one of the trips being a week before they struck.
The National Union of Journalists and the British Press Photographers' Association claim counter-terrorism laws are being used to harass photographers.
In some cases photographers' images are deleted or individuals told photography of public buildings and officers in uniform is banned.
A demonstration over the issue took place in February, with hundreds of photographers gathering outside New Scotland Yard.
They said an amendment to the Counter Terrorism Act 2008 could be interpreted as banning photographs of police and certain places and leave them open to arrest.
Shami Chakrabarti of Liberty said the law has "always been an accident waiting repeatedly to happen" and Parliament should step in to revise it.
NUJ General Secretary Jeremy Dear said: "We need senior officers to ensure that police on the ground respect the rights of journalists and members of the public. That basic fact isn't changed by any of the information released today."
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