Key Points:

A delighted Ahmed Zaoui cried as he phoned his family to say he would be allowed to stay in New Zealand, he has just told reporters.

The SIS today withdraw its security risk certificate against Mr Zaoui effectively allowing him to stay in NZ as a refugee.

"I'm thrilled and delighted," Mr Zaoui, an Algerian who arrived in New Zealand in 2002 but was immediately imprisoned.

"I'm happy not just because my name has been cleared but because the whole system of security risk certificates can now be reviewed."

Mr Zaoui, who has been living with the Catholic Benedictine order in Newton, Auckland, since being released from prison in 2004, phoned his family who are living in a South-east Asian country to break the news. He said he cried with them as they talked about how they could now come to visit him in New Zealand, though approval for them to live here may still require the Minister of Immigration.

Mr Zaoui told a huge press conference of reporters that he had never waivered from his belief in the democratic system of New Zealand.

"I knew justice would be done."

in a dramatic announcement this afternoon, the head of the Security Intelligence Service Dr Warren Tucker said Ahmed Zaoui is no longer a security risk.

Dr Tucker held a press conference at the Crown Law Office in Wellington at 3pm to say the certificate against Zaoui had been removed.

Dr Tucker said Mr Zaoui was "clearly a risk" when he arrived in New Zealand in 2002 as he had convictions in France and Belgium for participating in and leading terrorist networks. He had been deported from Switzerland and was excluded from the UK.

But he said he had reviewed the position following new evidence presented by Mr Zaoui.

"I am now satisfied that in 2007 he is no longer considered to be a risk," Dr Tucker said.

His decision was based on:
- Mr Zaoui becoming "more candid" in the information he provided to the authorities in New Zealand

- newly received classified information which showed Mr Zaoui's associates were involved in terrorism, not Mr Zaoui himself

- the length of time he has been in New Zealand and the distance in time from the offences he was convicted of

Mr Zaoui and his legal team issued a statement in which he said he was delighted at the outcome and expressed his gratitude to Dr Tucker for reviewing the certificate.

The statement said: "Mr Zaoui considers that the Director's decision today, read with the earlier Refugee Status Appeals Authority decision granting him refugee status, puts an end to the false accusations, originating from the Algerian military regime, that he was at any time a terrorist or a supporter of terrorism.

"In order to move forward, Mr Zaoui has conceded that the making and maintaining by the Security Intelligence Service of the certificate against him was justified on the basis of the information which they held.

"But he does not accept that he has in fact at any time been a danger to the security of New Zealand or any other country."

In December 2002, Zaoui was picked up by Immigration officers at Auckland International Airport after information that he had worked for the Algerian political party, the Islamic Front for Salvation, nad had helped Algerian terrorists.

A certificate naming him as a security risk was issued by the SIS in 2003 but the information on which it was based was never released.

Just five months later, however, the Refugee Status Appeals Authority granted him refugee status.

Since then Zaoui and his combative lawyer, Deborah Manning, waged a long battle in courts to allow him to stay in New Zealand and to reveal the information the SIS said it had against him.

Prime Minister Helen Clark said today: "The Director of Security has advised me of his decision regarding Mr Zaoui's security risk status.

"This is an independent statutory decision, as it always is in such matters, and the Director has my full confidence."

A delighted Keith Locke, the Green Party MP and long-time supporter of Zaoui, said the announcement was a great moment.

"It's a victory for compassion and justice over meanness and bigotry.

"But I'm sad that it has taken nearly five years of his life.

"It's a great success to him for his determination and to his lawyers and the public support."

Mr Locke said Mr Zaoui could now apply for his family to come to New Zealand.

"There won't be any trouble with that, I imagine, and he can resume a full life in New Zealand."

"Ahmed Zaoui's success benefits the civil liberties of all New Zealanders, by making the Government more accountable as to who it labels a 'security threat'," Mr Locke said.

But New Zealand First leader Winston Peters said Zaoui should never had come to New Zealand in the first place.

"The decision does not change the fact that three superior jurisdictions have found against him, and that no Islamic country will take him.

"Essentially, well over $3 million of taxpayers' money has been spent on Mr Zaoui's attempts to jump the queue and bypass the provisions of security risk procedures and decisions.

"He should never have been granted entry into New Zealand in the first place, and withdrawing his security risk certificate has advertised New Zealand once again as the number one soft touch for illegal immigrants," concluded Mr Peters.

A four-week hearing into the Security Intelligence Service (SIS) assessment that the once-elected Algerian MP posed a security risk to New Zealand was held in Auckland starting in July.

The hearing before the Inspector General of Intelligence and Security, Justice Paul Neazor, was not open to the public, and the fact that the SIS in reaching its decision made use of classified material means that Mr Zaoui could not fully view what the accusations against him are and who made them.