David Blunkett has revealed he is planning to lift the blanket ban on the use of covertly obtained intelligence as evidence in court.

Interviewed in the Guardian on Thursday the home secretary said he believes the move will improve the controversial policy of detaining suspected foreign terrorists indefinitely without trial.

The government has been accused of undermining civil liberties through the powers contained in anti-terror legislation.

Blunkett wants to head off some of that criticism by bringing evidence into the open, without compromising the security of sources, fears over which led to the original rule.

He acknowledged that the issue is "technically very challenging".

"You need to wall off some of the international activity that you would never want to use in court," the home secretary said.

"Otherwise, they [the intelligence services] would have to go through the preparatory niceties because we have such very strict rules of evidence.

"And, if the details did not live up to the rules, then they could never be presented because the evidential base would not be secure enough. You would blow their systems and agents wide open."

He also wants to reduce the need to detain terror suspects by imposing restrictions on those charged with a new offence of acts preparatory to terrorism.

Measures could include banning suspects from holding bank accounts or using the internet.

"Such activity could be monitored and if restrictions were breached the individual would be in breach of the criminal law," Blunkett said.

"It is about dealing with them without putting them in jail, and not about putting them in jail.

"It would allow us to get into at a much earlier state what the networks do in supporting terrorism across the world, for example the raising of funds and the ability to organise cells".