Police stand guard as a van arrives at court transporting people arrested in raids across Sydney November 8, 2005. REUTERS/David Gray

CANBERRA (Reuters) - Australian authorities dropped terrorism charges against a Sydney medical student on Monday, with a judge condemning police and intelligence agents for "grossly improper" behaviour in the case.

Izhar Ul-Haque, 24, had been charged with receiving weapons training in 2003 from the Pakistan-based group Lashkar-e-Taiba, which Australia lists as a terrorist group. The case was dropped after police interviews with him were ruled inadmissible in court.

New South Wales Supreme Court judge Michael Adams said officers from the secretive Australian Security Intelligence Organisation (ASIO) had kidnapped and falsely imprisoned Ul-Haque during their investigations.

"It was a gross interference by the agents of the state with the accused's legal rights as a citizen, rights which he still has whether he be suspected of criminal conduct or not, and whether he is Muslim or not," Adams said.

The development is a further blow to Australia's tough stand on national security after prosecutors in July dropped charges against an Indian doctor, saying they had made a mistake by publicly charging him with supporting terrorism.

It is also another setback for conservative Prime Minister John Howard, who won elections in late 2001 and 2004 on the back of his tough stand on national security but whose government now trails badly in the polls ahead of the November 24 general election.

Australia has gradually toughened anti-terrorism laws since 2001. In August the courts ruled that police had the right to impose strict limits on people suspected of links to militant organisations.

Prominent human rights lawyer Julian Burnside on Monday criticised the government's record on human rights, and threw his support behind a campaign to wind back some anti-terrorism laws and for Australia to adopt a bill of rights.

"The Howard government's track record on human rights has really been catastrophic," he told Australian Associated Press.

Australia, a close ally of the United States with troops in Iraq and Afghanistan, has never suffered a major peacetime attack on home soil, although 92 Australians were among more than 220 killed in bombings on the Indonesian island of Bali in 2002 and 2005.

Ul-Haque had no comment on Monday's developments, but his lawyer described the prosecution as flawed from the start.

"From the beginning, this was no more than a show trial designed to justify the billions of dollars spent on counter-terrorism," lawyer Adam Houda told reporters. "It has been one bungled prosecution after another."

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