Babar Ahmad, 31, from Tooting, southwest London, lost the first round of his battle against being sent to the US yesterday, the day the Government announced it was bringing in new anti-terror laws.

The case was referred to Charles Clarke, the Home Secretary, by Senior District Judge Tim Workman, at Bow Street Magistrates’ Court. Mr Clarke has two months to decide Mr Ahmad’s fate.

Lawyers for Mr Ahmad argued that he would be at risk of the death penalty if sent to the US and could be transferred to military jurisdiction. But a diplomatic note sent to Jack Straw, the Foreign Secretary, by the US Government, was produced in court, stating that Mr Ahmad would not face the death penalty, or be sent to Guantanamo Bay.

The judge told Mr Ahmad that none of the statutory bars applied to refusing extradition. He added that he had “no doubt” that the complex issues in the case would need to be examined by the High Court and that Mr Ahmad had the right to appeal.

Up to a hundred of Mr Ahmad’s supporters gathered outside the court chanting for him to be freed.

Mr Ahmad, who was arrested by British anti-terrorist police in December 2003, was remanded in custody.

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