Home Secretary Theresa May has lost her appeal against a ruling preventing the deportation of preacher Abu Qatada.
She acted after the Special Immigration Appeals Commission said the radical cleric could not be returned to Jordan.
Judges say he could face an unfair trial involving evidence obtained by torturing others.
The Home Office said it would further appeal, adding: "This is not the end of the road. The government remains determined to deport Abu Qatada."
A spokesman added: "In the meantime we continue to work with the Jordanians to address the outstanding legal issues preventing deportation."
In their judgement, Master of the Rolls, Lord Justice Richards and Lord Justice Elias, said the appeals commission was entitled to think there was a risk that the "impugned statements" would be admitted in evidence at a retrial.
"In consequence, there is a real risk of a flagrant denial of justice," they said.
The judges said the court accepted that Qatada "is regarded as a very dangerous person", but that was not "a relevant consideration" under human rights laws.
Re-arrestThe Court of Appeal ruling means Mrs May faces releasing the cleric just two weeks after detaining him.
His re-arrest this month followed an alleged breach of bail conditions which involved condition 10 of his bail agreement, concerning the use of communications equipment at his home.
Judges at an urgent Special Immigration Appeals Commission (Siac) on 9 March ruled he must return to Belmarsh prison.
The legal battle over Abu Qatada has gone on so long, he's seen off six home secretaries. It's now very, very, difficult to see where Theresa May can go from here.
The Court of Appeal's ruling makes clear that the chances of an appeal to the Supreme Court are very slim.
The immediate effect is that the preacher can't be detained under immigration law because there's no realistic chance he is going to be deported anytime soon.
So if the home secretary wants to get rid of the cleric, she'll have to start all over again trying to convince judges that the facts on the ground in Jordan have changed.
Critics of this legal saga say it would never have been necessary if Abu Qatada had been charged with a crime and put on trial.
The Metropolitan Police said his re-arrest was linked to an investigation into extremist internet material.
Siac ruled in November there was a "real risk" evidence gained by torture could be used against Abu Qatada at a retrial in Jordan, meaning that he would not get a fair hearing.
In April 1999, he was convicted in his absence on terror charges in Jordan and sentenced to life imprisonment, and it is on these charges that he faces a retrial.
At a Court of Appeal hearing earlier this month, lawyers for the UK government argued a block on his deportation should be lifted, saying a "fair" trial in Jordan was possible.
James Eadie QC, appearing for Mrs May, said Siac had taken an "erroneous" view of the situation in Jordan and the legal tests that had to be applied when it came to assessing the conditions Abu Qatada could face there.
He said Jordanian law bans the use of torture and reliance on statements extracted under duress.
Jordanians will do everything in their power to make sure Abu Qatada receives a trial that was "fair and seen to be so", he added.
But lawyers for Abu Qatada told the court that the UK should not send someone back to a country with a "dubious human rights record".
Edward Fitzgerald QC, appearing for the cleric, argued the Siac ruling was right and there was "concrete and compelling evidence" that his co-defendants were tortured into providing evidence.
He said government lawyers had "identified no error of law" and were "quarrelling with findings of fact".
Abu Qatada was first arrested in October 2002 in south London and detained in Belmarsh high-security prison. He was re-arrested and released on bail number of times over the years that followed.
In November 2012, he was released on bail from prison in when the courts blocked the home secretary's latest attempt to deport him to Jordan.
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