Key Points:

The Solicitor-General says New Zealand's anti-terror law is virtually unworkable, but terrorism charges could have been brought under better legislation.

David Collins, QC, said yesterday he could not authorise prosecution against 12 of the so-called Urewera 16 under the Terrorism Suppression Act.

Dr Collins was scathing of the act, describing it as "almost impossible to apply in a coherent manner" and a "very significant" factor in his decision.

In weighing up whether to allow prosecution, he considered the law, how the evidence applied to it, the likelihood of a successful prosecution and whether a case would be in the public interest.

He viewed hundreds of pages of intercepted communications, a "large number" of photographs, and video footage obtained by police surveillance.

Dr Collins said the evidence showed that the accused were involved in "very disturbing" activities, but "in my view the evidence fell short of actually meeting the very technical requirements of the act".

The act was "unnecessarily complex, incoherent and as a result almost impossible to apply to the domestic circumstances observed by the police in this case".

He declined to answer whether he thought the cases may have presented a terrorist threat, but said the decision not to prosecute was a close call for some of the accused.

"A number of people could, on one view of it, [have] possibly come close to meeting the criteria under the act.

"If the legislation had been framed differently, it is possible that charges under the Terrorism Act may have been able to be brought."

Dr Collins outlined several requirements that would have had to be filled to meet the act's criteria:

* That the act in question was a terror act (inducing terror in a civilian population or forcing a government to do or not do an act).

* That the act advanced an ideological, religious or political cause.

* That it resulted in one of five outcomes including death or serious injury, a serious risk to the safety of a population, or serious damage to property of great value

* That the act had taken place, which includes whether there was a credible threat or sufficient planning if it had not been carried out.

Dr Collins said another major issue was that the law focused on a "terrorist entity".

"If individuals are actually developing towards, possibly ... carrying out a terrorist act, they are not yet [that] entity. So there is a tautology in the legislation which is extremely difficult to unravel."

That did not mean the law required the accused to have committed terrorism, but "you have to be very well down the track".

He also pointed to the difficulties of section 13, which he said the police had an eye on when they referred the matter to him.

"A person has to know the group or organisation that they are seen with is an entity that carries out or participates in the carrying out of a terrorist act, and that they participate in the group for the purposes of enhancing the group to carry out a terrorist act.

"That very quick summary might give an indication as to why I think it's unnecessarily complicated and very, very difficult to apply. There will be circumstances where [the act] can be made to work, but certainly not in fundamentally domestic circumstances."

In light of his heavy criticism, the Government has agreed to send the act - which has an amendment to it going through Parliament - to the Law Commission to be reviewed.