The British government is to pay millions of pounds to a group of former Guantanamo Bay detenus in a deal to settle court cases over allegations of its complicity in their torture during interrogation.

It is alleged that British intelligence agencies were aware of their “extraordinary rendition” to overseas prisons where they were tortured before being taken to Guantanamo Bay.

The former U.S. President, George W. Bush, has claimed in his memoirs that information extracted from alleged terror suspects under torture helped Britain foil an attack on Heathrow airport and other high-profile targets in London.

British intelligence agencies, however, denied knowingly using information obtained under torture. The government insists it does not “condone” torture.

If the court cases had gone ahead, the government would have been forced to disclose secret intelligence that it claims would have compromised national security. Courts refused to allow MI5 and MI6, which are accused of colluding with American and other foreign agencies in the alleged ill-treatment of the claimants, to give evidence in secret.

Up to 16 men, who are either British citizens or residents, are expected to benefit from the deal. They include Binyam Mohamed, who was held in Pakistan and claims that British intelligence agencies knew he was sent to Morocco by American security forces where he was tortured.

The government refused to disclose the total amount to be paid on grounds of confidentiality but media reports claimed it could be in excess of £10 million.

Announcing the deal in the Commons, Justice Secretary Kenneth Clarke said it would pave the way for a judicial inquiry into “serious allegations of the government's complicity in the mistreatment of detainees held by other countries”. He said it was part of a “negotiated settlement” and did not amount to an admission of government culpability.

“No admissions of culpability have been made in settling these cases and nor have any of the claimants withdrawn their allegations,” he said.

The alternative to the deal, he said, would have been “protracted and extremely expensive litigation” that could have cost up to £50 million.

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