The Holocaust denier, Frederick Toben, has been released from custody after the German government gave up its legal battle to extradite him from Britain.

The controversial historian was arrested at Heathrow last month on a European arrest warrant accusing him of racism and anti-Semitism. German prosecutors were then forced to appeal to the High Court after a British Court refused to hand him over.

Kevin Lowry-Mullins, Dr Toben's solicitor, confirmed today that the appeal had been withdrawn and he had signed a consent order with the German government to end the case.

Mr Lowry-Mullins told The Times: "Dr Toben was released from custody yesterday. He's over the moon."

Lawyers acting for the German government argued last month that Dr Toben, the founder and director of the revisionist Adelaide Institute, should be extradited to face trial for posting claims on the institute's website that there was no mass murder of Jews by the Nazis.

But Westminster Magistrates Court district judge Daphne Wickham ruled that the warrant used to arrest the 64-year-old Australian as he travelled from America to Dubai on October 1 was "vague and imprecise". Dr Toben was unable to raise the £100,000 bail however, and remained in custody awaiting Germany's appeal at the High Court.

Under Section 130 of the German criminal code, holocaust denial is illegal and offenders can face up to five years in jail, but the case caused unease in Britain where there is no such law. Attempts to extradite him were seen by many as an assault on free speech.

Mr Lowry-Mullins said: "The offence is not made out in the UK. If Dr Toben had been extradited back to Germany for Holocaust denial, which does not exist as an offence in this country, then we would have found ourselves in a situation where hypothetically, the Iranian government could have asked for all the gay Iranian asylum seekers to be extradited back to Iran."

Mr Lowry-Mullins said the German chief state prosecutor handling Dr Toben's case had been so confident of success at one point that he had bragged Dr Toben would be in Germany for Christmas.

But the solicitor said that he believed the German government had been shaken by comments he had made outside court after the discharge hearing.

"I said, 'We will go all the way to the House of Lords with this and let the House of Lords decide'. But when the draft extradition Act passed through the House of Lords in 2002, one of the questions was what would happen if someone was arrested on a European arrest warrant to be extradited to a country where Holocaust denial is an offence.

"The response was, 'No, that will never happen'."

Mr Lowry-Mullins confirmed that Dr Toben was still in England waiting for his passport to be returned to him.

Dr Toben was previously convicted and jailed for nine months in Germany in 1999 after he claimed on the Adelaide Institute website that the Holocaust had been grossly exaggerated.

In a disclaimer on the present day site, Dr Toben writes that anyone who questions the "Holocaust story/legend/myth...will face a world-wide group of enforcers who will use any means to destroy dissenting voices."

He adds: "If you wish to begin to doubt the Holocaust narrative, you must be prepared for personal sacrifice, must be prepared for marriage and family break-up, loss of career, and go to prison. This is because Revisionists are, among other things, dismantling a massive multi-billion dollar industry that the Holocaust enforcers are defending."

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