Thousands of people could be in line for compensation tonight after they were illegally stopped and searched by police using controversial counter-terrorism legislation.
An urgent review is under way after officials discovered 14 police forces failed to get the correct authorisation for operations that allow them to stop members of the public without reason.
They found 40 operations dating back to 2001 where police who were granted powers to use section 44 of the Terrorism Act 2000 had no legal basis after they applied for an invalid timescale or were not countersigned quickly enough.
Home Secretary Theresa May was said to be "very angry" about the astonishing blunders and her Cabinet colleague Security Minister Baroness Neville-Jones said she was "extremely concerned".
The coalition Government has already ordered a wide-ranging review of counter-terrorism legislation and pledged to introduce safeguards to prevent misuse of invasive powers.
Earlier this year, the European Court of Human Rights ruled that indiscriminate section 44 searches were illegal but they remained in place while the Government sought permission to appeal.
Campaigners, who have already highlighted how the powers are often used against demonstrators and photographers, said the "dangerous and undemocratic law" must be dumped immediately.
Police sources said preparations for losing section 44 stop and search powers were well advanced despite their argument that they helped make Britain a "hostile environment" for terrorists.
Baroness Neville-Jones said police would try to contact every person affected by the blunders, but the Metropolitan Police said it did not hold many of the relevant records.
She said: "To maintain public confidence in our counter-terrorism powers, it is absolutely crucial all those responsible for exercising them do so properly.
"I take these matters extremely seriously and have instructed the Department to conduct an urgent review of current procedures to ensure that errors can be prevented in future.
"The Government is already committed to undertaking a review of counter-terrorism legislation which will include the use of stop and search powers in section 44 of the Terrorism Act 2000. We shall make our findings known as soon as possible."
The discovery came after the Metropolitan Police, which is responsible for about nine out of 10 section 44 searches, began to investigate a request under the Freedom of Information Act.
Officials found former Home Secretary David Blunkett had not signed an authorisation form for an April 2004 operation in which 840 people were stopped within the 48 hour deadline.
This sparked an internal Home Office review which uncovered a further 36 cases of dodgy authorisations, including 35 occasions when forces asked for a search window in excess of the maximum 28 days.
Three cases, involving South Wales Police and Sussex Police, already highlighted to Parliament from previous inquiries were added to the figures.
Asked whether the force now faced a flood of legal actions, a Metropolitan Police spokesman said: "It is a matter for individuals to seek legal advice in relation to this issue."
Cumbria chief constable Craig Mackey, a member of Acpo and the national lead for stop and search, admitted "mistakes have been made".
He said: "Powers to stop and search can play an important part in keeping our communities safe from terrorism but should always be used in a proportionate way, recognising the critical need to retain local confidence.
"Where mistakes have been made in the application of these powers, it is vital that we learn from them."
Corinna Ferguson, of civil liberties organisation Liberty, said: "We are grateful to the Government for making these blunders public but they merely highlight the ongoing dangers of secret stop and search authorisations.
"This is one of many objections to a power that has been found unlawful in the Court of Human Rights and has been more of a hindrance than a help to anti-terror policing."
Alex Deane, of campaigning organisation Big Brother Watch, said: "Section 44 stop and search is a dangerous and undemocratic law that has been used to invade the privacy of law-abiding people.
"The European Court has ruled its use illegal and this latest revelation proves that the police have been abusing the intrusive powers that it provides.
"There can be no fudge: if the coalition Government is serious about protecting privacy, it must halt the use of Section 44 authorisations immediately."
* The forces involved are: Met, North Yorkshire, Hampshire, Bedfordshire, Essex, Greater Manchester, Fife, South Wales and Thames Valley.