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JAKARTA/CANBERRA - The quashing of Muslim cleric Abu Bakar Bashir's conviction for conspiracy in the 2002 Bali bombings was a "disgusting" failure of Indonesian justice, Australian bomb victims and their families said on Friday.

Australia lost 88 nationals in the attacks on nightclubs on the Indonesian resort island. Three New Zealanders also died.

Australia's Prime Minister John Howard said he was powerless to intervene after Indonesia's Supreme Court overnturned Bashir's conviction, while Australia's top police officer said he had no doubt Bashir was guilty.

"No doubt whatsoever, and that view is shared with me by my counterparts in Indonesia," Australian Federal Police Commissioner Mick Keelty told local radio.

"It's very hard to get the Mr Bigs unless you've got direct evidence, and of course the evidence against Bashir was very much circumstantial evidence."

Keelty said the ruling could encourage Bashir's militant followers to plan more attacks.

"Obviously it will be a filip to some who are committed to committing terrorist attacks in that part of the world," he said.

Bashir was released in June after completing a 30-month jail sentence for being part of a conspiracy behind the bombings.

The Supreme Court, in response to Bashir's appeal challenging the verdict, ruled that the cleric was not guilty of that crime.

"It has been been granted. He was not proven guilty. Of the 30 witnesses presented during his trial, none confirmed that Bashir was involved in the Bali bombings," Supreme Court spokesman Joko Upoyo said.

The Antara state news agency quoted the chief judge on the panel examining the case, German Hoediarto, as saying the court had ordered that Bashir's name be rehabilitated.

One of Bashir's lawyers, Muhammad Assegaf, said Bashir had the right to claim damages for the time he spent in jail, in addition to rehabilitation.

"He thanked God for the decision. He leaves any further legal move to us. Whether he will claim damages we need to consult him again," Assegaf told Reuters.

Bashir had reacted calmly to the verdict, another of his lawyers, Mahendradatta, told Antara.

"His tone was calm when he reacted to the decision," he said.

The Bali blasts killed at least 202 people, mostly foreign tourists.

Dave "Spike" Stewart, who lost son Anthony in the Bali attacks, said the whole world considered Bashir the spiritual mastermind of Jemaah Islamiah, an extremist group blamed for the Bali bombings and a string of other deadly attacks in Indonesia.

"He's going to kill more people without even thinking about it. I just cannot believe that they've said he's guilty of nothing. It's disgusting," he said.

Western nations, especially Australia, had previously protested against what they regarded as too lenient treatment of the frail-looking but sharp-tongued cleric.

White-bearded and bespectacled, Bashir has consistently denied any connection to that or other attacks blamed on Jemaah Islamiah.