Identity cards would be political suicide, said the lord chancellor, and would constitute a first step towards a police state. Don’t hold the presses. Charles Falconer was performing at a charity event taking the role of the hapless Jim Hacker in a Yes, Minister sketch written a generation ago. Having Falconer deliver the line was a good joke.

But George Churchill-Coleman, a former head of Scotland Yard’s anti-terrorist squad, was not kidding when he said last week: “I have a horrible feeling that we are sinking into a police state.” He was responding to the home secretary’s proposed power of house arrest for terrorist suspects.

The government is in a mess. After September 11, 2001, it found a few people living in Britain with possible links to political organisations that use terror. It would have liked to be rid of them. But if these people pose a threat it is probably mainly to the dictators in their own countries, who would torture or kill them given the chance. Our international obligations forbid us sending them home.

So the government has detained them without charge or trial. I suspect it has also exaggerated the threat that they may pose to Britain. It has used immigration legislation that is inappropriate for indefinite detention, and it has sought derogations from human rights legislation that cannot be justified except in the short term.

In December the government had a bit of luck. It was offered the opportunity to start again. The law lords’ ferocious judgment against detention coincided with David Blunkett’s resignation. The new home secretary could have reviewed the existing cases and unveiled new safeguards.

But Charles Clarke made mistakes from the beginning. On hearing the law lords’ judgment, instead of biding his time he declared that the government was right to go on holding the suspects.

His new proposals are highly paradoxical. By violating the human rights of British citizens too, he will address the finding that the law discriminates against foreigners. The new power will apply house arrest to everyone. Worst of all, it will be wielded by a politician, the home secretary.

One good reason not to trust the government with such powers is that its justifications are so inconsistent. When the Home Office decided in 2001 to use immigration legislation to hold foreign suspects it argued in a memorandum that “while it would be possible to seek out other powers to detain British citizens . . . it would be a very grave step. The government believes this would be difficult to justify”. Amen to that.

Last week Clarke told the Commons that “the need to protect ourselves against the threat justifies the changes”, although he acknowledged that he was proposing “a very substantial increase in the executive powers of the state in relation to British citizens who we fear are preparing terrorist activities”. The suggestion that we need extra powers to lock up Britons was produced like a rabbit from a hat.

There is no new threat from British suspects and no new deficiency in the government’s powers. Clarke is changing the law because he cannot deport the foreigners and fears to release them. This government is tossing away the liberties of British citizens using spurious arguments.

There have been other inconsistencies. The foreign suspects are said to pose a threat. Yet one of them was escorted under guard to Paris where he was freed, and not re-arrested by the French. Washington argued similarly that the British detainees in Guantanamo Bay were too dangerous to set loose. Yet now they are at liberty in Britain. If the Americans exaggerate the risk are we not justified in fearing that the British government does too?

Clarke oozed insincerity when he claimed that if his new powers of house arrest had been in force he might have detained the four released by the Americans last week. But why then did the British government argue for their return, knowing that it lacked the power to hold them?

The home secretary was merely seeking to give some “cover” to our American allies who had detained for three years four people that Britain was happy to release after 24 hours. Fortunately he does not yet have the power to detain them. If he did he would now be under intense US pressure to use it.