The move, confirmed last night by Charles Clarke, the Home Secretary, means that extremists convicted under the new legislation could be jailed for seven years and suspects held without charge for up to three months.

Mr Clarke was known to be concerned that previous legislation to combat animal rights extremists has so far resulted in only one prosecution.

In July, a new offence of economic sabotage was introduced under the Serious and Organised Crime Act, after pressure from companies involved in Britain’s £3 billion-a-year life sciences industry. However, lawyers had questioned how easy the offence would be to prove and Mr Clarke was thought to have had doubts about its effectiveness.

The new terrorism laws were designed primarily to target the so-called preachers of hate who glorify terrorist attacks. However, the Home Secretary told MPs and peers that animal rights supporters who celebrated militant attacks should also face prosecution.

Speaking to the joint Lords and Commons human rights committee, he said: “I certainly think that animal rights terrorism is something that has to be attacked. Those who argue that committing violent acts of terror to promote the cause of animal rights and who justify it by referring to it would be covered by this legislation.”

Mr Clarke made reference to an attack in July on an Oxford University boathouse which caused an estimated £500,000 worth of damage. The university was targeted because animal rights activists want to stop it from building a new animal research laboratory. Work was halted last year when the main contractor, Montpellier, pulled out after being threatened. It has yet to restart.

Brian Cass, the managing director of Huntingdon Life Sciences — Britain’s largest animal research facility, which has suffered a relentless campaign of vandalism and harassment — welcomed the Government’s decision.

Mr Cass, who suffered head injuries when he was attacked by masked animal rights extremists armed with pickaxe handles in 2001, said: “Anything that provides greater opportunities for the police to track down and prosecute people who are carrying out the kind of harassment and intimidation and occasionally violent acts that we’ve seen is very welcome.”

But industry sources last night expressed surprise at the move.

One senior official who was involved in formulating new laws to prevent activists from targeting drug developers and their suppliers, suggested that the proposals would be distracting.

“This is completely at odds with what we were expecting. There is a genuine concern from within the industry that labelling animal extremists as terrorists could get in the way of enforcement. I suspect that the police don’t really want this. We already have appropriate measures to deal with some of the more serious offences that are now being committed in the name of animal rights activism.”

The source added: “Let’s keep this in perspective — I would still rather meet an animal rights campaigner in Oxford Street than a suicide bomber. That is the difference between extremism and terrorism.”

The source said that any move to classify animal extremists as terrorists might also affect insurance cover: “Some insurance companies tend to get a bit difficult if they are asked to pay out on a terror event.”

Mr Clarke also told the committee that the Government was actively considering radical changes to the way terrorism cases are handled in the UK. He said that ministers were considering introducing a French-style inquisitorial system to deal with cases. Under the system the judges are deeply involved in overseeing the police inquiries and can even suggest lines of investigation that officers should conduct.

He admitted that such a change from the present adversarial courts system in which the prosecution and defence argue their case before a jury would be a major change.

Mr Clarke said no proposals had been brought forward because there was no consensus among ministers. However, he made clear that he was in favour of the idea.

The Home Secretary also said that the Government was urgently looking at allowing police to continue questioning suspects after they had been charged with an offence.

He said that the move would have significant implications for the whole legal system.

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