Prime Minister Gordon Brown paved the way today for some evidence gained from the bugging of suspects to be used in court - provided detailed safeguards are met.
He announced that he plans to go ahead with the move, as long as nine detailed conditions laid out in a review by Whitehall mandarin Sir John Chilcot can be met.
A cross-party committee of privy councillors led by Sir John will work alongside a Government implementation team to draw up a regime designed to allow some intercept evidence to be used, said Mr Brown.
Mr Brown told MPs in a Commons statement: "The use of intercept evidence characterises a central dilemma that we face as a free society - that of preserving our liberties and the rule of law, while at the same time keeping our nation safe and secure."
Previous prime ministers have turned down suggestions of using intercept evidence in court because of fears from the security services and the police that it risked tipping criminals off about their methods and would create a welter of paperwork.
But, publishing an edited version of the Chilcott Report, Mr Brown said: "It concludes that it should be possible to find a way to use some intercept material as evidence provided - and only provided - that certain key conditions can be met.
"These conditions relate to the most vital imperative of all, that of safeguarding our national security.
"The Government accepts this recommendation, and takes the accompanying conditions very seriously."
He said the report warned "any disclosure of interception capabilities could have a profound impact on national security".
Mr Brown said the Chilcott conditions centred on:
* Giving intercepting agencies the ability to retain control over whether their material was used in prosecutions;
* Ensuring that disclosure of material cannot be required against the wishes of the agency originating the material;
* Protecting the close cooperation between intelligence and law enforcement agencies;
* Ensuring agencies cannot be required to transcribe or make notes of material beyond a standard of detail they deem necessary.
The Prime Minister went on: "The committee acknowledges that further extensive work is needed to see whether and how these and other conditions, intended to protect sensitive techniques, safeguard resources and ensure that intercept can still be used effectively for intelligence, can be met.
"This is a unanimous recommendation that the Government accepts.
"We will proceed to develop a detailed implementation plan under which material might be available to be used in criminal cases in England and Wales, subject - and strictly subject - to meeting all the Chilcott conditions.
"This report is clear that if the conditions could not be met then intercept as evidence should not be introduced and the Government accepts this."
The report also said the possible introduction of intercept evidence would have no impact on the need for controversial control orders on suspects.
The premier warned there would need to be "a substantial programme of work" to meet all the requirements and said that would not be completed in time to be included in the counter-terrorism Bill going through parliament this session.
Mr Brown stressed to MPs: "The challenge is to, at all times, and without fail, protect our nation's security while advancing the rule of law."
Tory leader David Cameron welcomed the report, but warned that the implantation body must not be a "talking shop for further delay".
"At the end of the day, this is a political decision and that has got to be made by a politician. That means him," he said.
"It is clear what needs to be done - intercept in court so we catch, convict and imprison more terrorists. We must not put off endlessly what needs to be done."
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