Charles Clarke suffered a massive setback on his first full day as home secretary on Thursday after the law lords dismantled the government's flagship anti-terror measures.

The eight to one judgment said ministers could not keep foreign terrorist suspects in prison without trial.

Clarke responded by saying the men currently held in Belmarsh prison, south east London, and Woodhill, Milton Keynes, who took the government to court would stay in jail with other detainees for the time being.

"I will not be revoking the certificates or releasing the detainees, whom I have reason to believe are a significant threat to our security", he said.

"It is ultimately for Parliament to decide whether and how we should amend the law."

The House of Lords ruled that the human rights of foreign suspects held for up to three years without charge or trial had been breached.

Lord Hoffman said that the case called into question "the very existence of an ancient liberty of which this country has until now been proud: freedom from arbitrary arrest and detention".

He added: "The real threat to the life of the nation . . . comes not from terrorism but from laws such as these."

David Davis, the shadow home secretary, said: "This judgment should not come as a surprise. We warned the government at the time they passed this legislation that it would be difficult to justify."