The Australian government has dropped terrorism charges against the Indian doctor arrested there in connection with last month's unsuccessful car bombings in Britain. From Sydney, Phil Mercer reports.

The terrorism charges against Mohamed Haneef have been dropped after a review of the case by Australia's Director of Public Prosecutions, Damian Bugg.

At a press conference in Canberra Friday, Bugg said that he had found that a major "mistake" had been made in the investigation of Haneef's case.

Bugg did not reveal what the mistake was, but he does say the evidence was not conclusive and stood almost no chance of securing a conviction.

"My view of this matter, a mistake has been made, and I will examine that, because to me the primary decision to make was to determine whether or not this prosecution was on sound footing or not. I've made that determination," he said. "I'll now take further steps to enquire as to how that mistake occurred."

The 27-year-old Indian doctor was arrested on July 2 at Brisbane's international airport. He was later charged with providing support to a terrorist organization involved in the failed bomb attacks in London and at Glasgow Airport.

Human rights lawyers said the case against Haneef was weak. A magistrate in Brisbane agreed. She said last week that investigators had failed to prove a direct link between Haneef and alleged bombers in the United Kingdom - and she ordered that Haneef be released on bail.

But Australia's federal government then intervened. It immediately canceled the Indian doctor's working visa and he was taken into immigration detention.

Australian Federal Police Commissioner Mick Keelty has accepted the decision to drop the terrorism charges, but he defends the integrity of the investigation.

"The team has at all times acted professionally and within the bounds of the law. The police investigation has been thorough," he said. "I make no apology for that."

After almost four weeks in custody, Haneef is to be released from prison and held in home detention until immigration officials decide whether to re-instate his working visa or deport him.

Three other people have been charged so far in connection with the attacks in Britain.

An inquiry was launched after two cars were found in London in late June with gasoline, nails and gas cylinders in their trunks. British police said the car bombs were clearly designed to cause death and injury.

A day later, a burning car loaded with gas cylinders was driven into the main terminal building at Glasgow's international airport in Scotland.