The dramatic ruling by a court in Rawalpindi is being seen as part of an agreement to speed up his return to the UK where Scotland Yard detectives want to question Mr Rauf about the Heathrow plot and his possible links to the 7/7 suicide bombers in London.

British police have not been allowed to talk to him since he was seized by Pakistani agents in August.

His detention triggered a series of arrests across Britain and forced ministers to go public on claims that British-born terrorists were about to detonate liquid explosives on planes flying from Heathrow to the United States. Thousands of passengers were left stranded at British airports and flights grounded. Pakistan officials named Mr Rauf as the ring- leader and claimed that his arrest led to them uncovering the Heathrow plot.

Eleven men, most of Pakistani origin, have been charged in the UK with conspiracy to murder and preparing an act of terrorism.

Mr Rauf has always denied any links with terrorism but the judge ruled that he must still face trial next week on charges of carrying fake identity documents.

Pakistani officials told The Times that while there was no extradition treaty with the UK they were prepared to return Mr Rauf if the British authorities wanted to question him. The officials added that they had been asked by Britain to reveal no more details about their investigations into Mr Rauf.

British police have already said that they want to interview him about the murder of his uncle, Mohammad Saeed, 54, who was stabbed close to his home in Alum Rock, Birmingham, in 2002.

Mr Rauf, who has dual nationality, is reported to have fled to Pakistan soon afterwards.

Police are eager to know whether he met two of the 7/7 bombers, Mohammed Sidique Khan and Shehzad Tanweer, who are known to have visited Pakistan shortly before they and two other British Muslims blew up three Underground trains and a London double decker, bus killing 52 people in July 2005.

Counter-terror detectives want to discover if Mr Rauf has any information about what the two bombers did during their visit to Pakistan. Senior intelligence officials in Islamabad say that Mr Rauf married a relative of Maulana Masood Azhar, the founder and leader of Jaish-e-Mohammed, an Islamist militant group in Pakistan.

On August 26 Aftab Khan Sherpao, Pakistan’s Interior Minister, alleged that Mr Rauf had “wider international links” with Islamic terror groups but offered no evidence to back up his claim.

Yesterday Mr Rauf’s lawyer, Hashmat Habib, said that the court’s decision to drop the terror charges cleared his name of any involvement in any bomb plots.

He said of the fraud charges still facing Mr Rauf: “These are minor charges and we hope to see him free after his trial on December 20.”

Prosecutors in Pakistan alleged that Mr Rauf was in possession of 29 bottles of the chemical hydrogen peroxide, which was intended to be used to blow up the passenger jets.

His lawyer said: “They failed to produce any evidence to support the allegations. This chemical is also used to heal wounds.”

Mr Rauf, whose whereabouts had been kept secret until his appearance in court yesterday, was allowed to speak to his grandmother and told her that he was in good health.

Rawalpindi’s police chief, Saud Aziz, said that he would contest the court’s decision and insisted that Mr Rauf had been involved in planning terrorist activities. “We did recover hydrogen peroxide from his possession and concentrated hydrogen peroxide mixed with gas can cause explosions,” Mr Aziz said.

A senior official told The Times that the absence of an extradition treaty between the two nations should not prevent Mr Rauf’s deportation, as Pakistan is a signatory to various international protocols and conventions related to the exchange of fugitives.

In the past Pakistan has returned several British nationals wanted on criminal charges.

Rashid Rauf

Explore Asia News

• China News

Times Recommends

• Riots as Zimbabwe turns off water supply
• Tourists told to stay away amid Venice floods
• Protest is no picnic for Carrefour customers