WASHINGTON, June 11: The US government's `war on terror’ suffered a new legal setback on Monday when judges ruled that an alleged Al Qaeda sleeper agent could not be held without charge on US soil.

The federal appeals court in the Virginia state capital Richmond, one of the country's most conservative courts, ordered the release from military detention of Qatari national Ali Saleh Kahlah al-Marri, 41.

Marri does not have to be set free. He can be tried on criminal charges in a civilian court, or be deported, the panel of three judges ruled in a split two-one decision.

“But the government cannot subject Al-Marri to indefinite military detention,” the majority opinion said.“For in the United States, the military cannot seize and imprison civilians -- let alone imprison them indefinitely.”

In a statement, the Justice Department said it was `disappointed’ at the ruling and said it would ask the Richmond Court’s full appeals panel of 13 judges to reconsider.

Citing `unrebutted evidence’, it said Marri had trained at a `terrorist training camp’ run by Al-Qaeda leader Osama bin Laden in Afghanistan and met alleged 9/11 mastermind Khaled Sheikh Mohammed in the summer of 2001.

Marri then entered the United States `to serve as an

Al-Qaeda sleeper agent and to explore methods of disrupting the US financial system,” it said.

President George Bush `intends to use all available tools at his disposal to protect Americans from further Al-Qaeda attack, including the capture and detention of Al-Qaeda agents who enter our borders,” the department added.

“We accordingly intend to seek further review of today's decision.”

Marri arrived in the United States on Sept 10, 2001, -- the day before the airborne attacks on New York and Washington -- along with his wife and five children.

He had a visa to study in Peoria, in the midwestern state of Illinois, where he had already studied. Marri was arrested three months later under suspicion of credit-card fraud.

But in June 2003, President Bush declared him an `enemy combatant’ and ordered his transfer to a military prison in South Carolina.

It was the latest reversal on the legal front of Bush's `war on terror’, after military judges at the Guantanamo Bay naval detention camp on Cuba dismissed all charges in two high-profile cases.

“This is a huge victory,” said Jonathan Hafetz, litigation director of the Brennan Center's Liberty and National Security Project and the lead counsel for Marri.

“The court soundly and rightly rejected the administration's attempt to treat the globe as a battlefield that is exempt from rule of law,” he said.—AFP