SYDNEY, July 27: Australia dropped charges against an Indian doctor allegedly involved in failed British car bombings and released him from custody on Friday, admitting mistakes were made rushing the case to court.

But Australia's top police officer refused to apologise to Mohamed Haneef, after the embarrassing backdown and the medic still faces possible deportation as he adjusts to house arrest after almost four weeks in custody.

Red-faced officials said they withdrew the charge that Haneef “recklessly” supported the terror group behind abortive bombings in Britain last month after a review found there was not enough evidence to support a conviction.

“On my view of the matter a mistake has been made,” Commonwealth Director of Public Prosecutions (DPP) Damian Bugg told reporters, adding that the review found there was no reasonable prospect of a conviction on the evidence.

Bugg described the collapse of the case as “disappointing” and “upsetting,” adding “we're all human.” The case against Haneef, who was arrested on July 2 as he attempted to leave Australia on a one-way ticket to India, has been dogged by controversy and labelled a bumbling “Keystone Cops” investigation by critics.

Haneef, 27, is alleged to have given a mobile phone SIM card last year to a relative subsequently arrested in connection with last month's failed plot to bomb central London and Glasgow airport.

The doctor, who has worked as a registrar in a Gold Coast hospital since last September, has denied any involvement with the failed attacks and his relative charged in Britain is not accused of direct involvement in terrorism.

Bugg said one of his prosecutors wrongly claimed at the doctor's original bail hearing on July 16 that his SIM card was found in a burning car that crashed into Glasgow airport June 30.

It has since emerged that the SIM card was found eight hours later at a flat in Liverpool, some 300 kilometres from Glasgow, where Haneef's second cousin was arrested.

He said the official also wrongly told the bail court, based on information provided by Australian Federal Police, that Haneef had shared a flat in Britain with some of the accused bombers before moving to Australia.

“There was an element of pressure, time pressure about this matter,” Bugg said, referring to deadlines on the amount of time Haneef could be held without charge under Australia's counter-terrorism laws.

Federal police commissioner Mick Keelty accepted the DPP's decision to drop the case but insisted there was still sufficient reason to support an earlier decision to revoke Haneef's immigration visa on character grounds.

Keelty refused to rule out further charges against Haneef, saying the investigation was ongoing, with cooperation from British police.

“Our obligation is to protect the Australian community from any type of terrorist threat,” he said.

Asked if he should express remorse about Haneef's treatment, he replied:

“An apology to Dr. Haneef is not a matter for the Australian Federal Police.” Immigration Minister Kevin Andrews, who controversially revoked Haneef's visa 11 days ago to ensure he remained in custody after a court granted him bail, said the doctor would be released to home detention pending a final decision on his immigration status.

“He is free to move about in the community but as a matter of legal principal... he is formally in detention,” Andrews told reporters. Haneef's lawyers have vowed to fight any move to deport their client.

Prime Minister John Howard moved to distance his government from the debacle, saying Keelty and Bugg were responsible for the handling of the case.

“I think that the right thing now is for those two men to explain the process and explain the reasons,” he told reporters on a visit to the Indonesian island of Bali.

“Prime ministers don't conduct prosecutions, nor do attorneys-general — directors of public prosecutions do.” Haneef's wife Firdous welcomed the news.

“I am extremely happy that finally the day has come when the truth has come out,” she told reporters outside her parents' house in the southern Indian city of Bangalore.—AFP