EIGHT of the terror suspects held at Belmarsh and other prisons for the past three years are expected to be freed on bail by this afternoon, amid growing chaos in Britain’s antiterrorism laws.

Early this morning the two Houses of Parliament were still locked in a war of attrition over Charles Clarke’s plans for new control orders. All the signs were that both Houses would sit all night as each refused to give way to the other.

After a day of high parliamentary drama the Lords again insisted on a series of changes to the new Bill, including their demand for a “sunset clause” under which it would expire next November.

Tony Blair is against the idea, which he says would send a wrong signal about the Government’s determination to defeat terrorism.

But a packed Lords decided shortly before midnight again to challenge the will of the elected House and sent the Bill back to MPs. The Commons was preparing to meet again within 90 minutes and planning to send the Bill back to the Lords once more.

Conservative sources said they had been told informally that the Lords would not be seeing the Bill again till 5 am in what appeared to be an attempt to sap the spirit of peers in one of the most serious clashes between the Houses in modern times.

Neither side appeared ready to give in, although it was assumed that eventually the Lords would have to bow to the elected House.

The astonishing stand-off came on the day the courts released an Algerian suspected terrorist under the powers that expire at midnight on Sunday.

Among the other prisoners likely to be released today is the radical cleric Abu Qatada. He will be freed on the first anniversary of the Madrid train bombings in which 191 people were killed. Spanish investigators linked him to a number of those who took part in the attack on four commuter trains.

The men have been held under laws passed after the September 11 attacks that have been declared unlawful by the law lords. They were being released under strict bail conditions, including electronic tagging. With Tony Blair refusing the demands of the Lords to set a time limit on his legislation, there was a risk that by Monday there could be no laws under which they could be held.

Despite increasing pressure on the Lords to bow to the will of the Commons, peers were refusing to give way. At 11 pm the Lords again took on the Commons by demanding a stronger standard of proof before control orders are made.

The urgency of the situation was underlined when the country’s top policeman said that the Belmarsh detainees would pose a serious threat to public safety if they were freed without controls. Sir Ian Blair, the Metropolitan Police Commissioner, said: “If legislation is not passed, these men must be released and I think that would be a grave threat to national security.”

Speaking after reviewing intelligence reports on the suspects, Sir Ian said: “All these people are a threat to the safety of the public in Britain.”

By mid-afternoon yesterday, Mr Blair let it be known that he was opposed to any kind of “sunset clause”, under which the Bill would have expired, first after eight months and then, after an attempt at a compromise by the Lords. after 12 months. He appeared utterly uncompromising. He said of peers: “They have simply got to understand (that) to continue to water down and dilute this legislation is not responsible. It is wrong. They should stop it.”

The decision to give the eight terror suspects bail came two months after the law lords ruled that the emergency law under which they were detained at Belmarsh and Woodhill prisons and Broadmoor hospital was unlawful.

The Algerian suspect, known only as A, was driven from the headquarters of the Special Immigration Appeals Commission (SIAC) in an unmarked police car shortly after being given bail.

He was reunited with his wife at his home and fitted with an electronic tag, one of the conditions of his bail.

Mr Justice Ouseley, the chairman of SIAC, said that he was granting in principle similar bail conditions to the other men, who have also been detained without charge or trial for up to three and a half years.

A tenth suspect, known as “G”, has already been released on bail. His bail conditions were relaxed last night.

The 11 bail conditions, based on proposals given to the court by the Home Office, resemble the proposed restrictions contained in plans to use control orders on international and domestic terrorism suspects.

Bail conditions for the other detainees will be closely based on those imposed on A.

Two foreign terror suspects who are now detained at Broadmoor are expected to be brought before the SIAC today.

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