A judicial review of their case is due to be heard in the House of Lords which Mr Straw said would turn on whether key sections of the Prevention of Terrorism Act were "incompatible" with the European Convention on Human Rights.
The Government believed the provisions were not incompatible with the ECHR and were "an important part of the armoury in the fight against terrorism". Their case was brought after the Lord Chief Justice, Lord Bingham and two other judges, ruled the anti-terror legislation breached the Human Rights Act 1998.
The fresh loophole will be plugged by emergency legislation today. No Irish terrorists were involved, but there could be others who were arrested illegally under the flawed anti-terror laws.
The Home Secretary said the mistake occurred when the Prevention of Terrorism Act was changed to abandon the use of exclusion orders, banning alleged Irish terrorists from mainland Britain, as part of the peace process in Ulster.
By mistake, the changes approved by the Commons also knocked out key parts of the anti-terrorism legislation under which the police were able to arrest suspects and cordon off areas for anti-terrorist operations. The mistake in the legislation meant measures which made it an offence to possess articles for suspected terrorist purposes, including credit cards, radio equipment, manuals and chemical containers, and unlawful to collect information likely to be useful for terrorist purposes had not been in force since 22 March, 1998. Such activities currently, therefore, were not illegal, Mr Straw told the Commons.
Apologising for the "regrettable error", he said in a statement that one person who had been awaiting trial under the defective legislation had had the case against him withdrawn.
Mr Straw did not hide the embarrassment the blunder has caused but his will not have been damaged by the mistake, which is seen at Westminster as one of the hazards of the job of Home Secretary.
Conservative former home secretary, Michael Howard (Folkestone and Hythe), said he had "considerable sympathy" with Mr Straw for finding himself in this predicament. But he said it was a very serious matter and urged him to seek a remedy urgently.
Mr Straw said: "As it were, I have now become a fully-fledged, paid-up member of the Home Secretaries Club. He went on: "What can you say when things like this take place? Certainly I am not going to put them on record."
A lawyer at the Home Office has been identified as responsible for the error in drafting the orders in 1998, which was copied across to this year's order. "Officials have apologised to the Home Secretary and he has accepted the apology," said a spokesman. Other parts of the Act which had been unenforceable included police powers to set up anti-terrorism cordons.
Shadow home secretary, Ann Widdecombe, welcomed Mr Straw's apology.Reuse content