The collapse of the terrorist offence trial against former Guantanamo Bay detainee Moazzam Begg raises "urgent questions" about the treatment of British Muslims, according to human rights groups.

Begg is due to walk free from prison after seven months, following a judge at the Old Bailey ordering a not guilty verdict on a series of terrorism offences after new material emerged which showed there was no longer a realistic prospect of conviction.

The 46-year-old, who spent nearly two years at the US detention camp before being released without charge, was accused of attending a terrorist training camp, facilitating terrorism and possession of a document likely to be of use to a terrorist following a trip to Syria.

He has always denied being involved in any terrorist-related activity and said he was visiting the civil war-torn country to carry out humanitarian work with the refugees there.

Following the collapse of his trial, the Islamic Human Rights Commission (IHRC) said Begg's arrest proves there is a "witch hunt" against British Muslims and his arrest raises questions about the discriminatory treatment they receive.

IHRC chair Massoud Shadjareh said: "As was widely suspected there seems to have been no basis for his arrest and it does seem that as a high-profile member of the Muslim community, Mr Begg was being made an example of in order to silence activists campaigning against draconian anti-terrorism laws.

"His persecution is especially disturbing in the context of yesterday's Conservative election manifesto pledge by the Home Secretary Theresa May to impose new curbs on organisations and individuals who are considered to hold 'extreme', or 'non-British' values.

"Under these proposed laws the likes of Mr Begg and others who outspokenly criticise western foreign policy would be criminalised for merely their beliefs and opinions".

Following his release from Guantanamo Bay, Begg went on to become a director of Cage, a human rights group that campaigns on behalf of those who feel they have been unfairly treated as part of the War on Terror.

The group said they now feel "vindicated" following Begg's release after claiming both they and Begg have been "maligned, defamed and vilified" since his arrest.

Asim Qureshi, research director of Cage, added: "This has been a testing time for Moazzam, his family and the Muslim community. The criminalisation of virtually any Muslim that has been to Syria has only increased in intensity, while Cage has been attacked from every angle by a host of government agencies.

"We hope that Moazzam's release is a sign that the government are now willing to adopt a more measured strategy in relation to anti-terrorism policy and avoid the attempt to criminalise all dissent and crush any organisation like Cage that stands up for the rule of law and justice."

West Midlands Police assistant chief constable Marcus Beale said: "This case has been investigated in a diligent and professional manner. Today's events demonstrate that the police and CPS continually assess the evidence in terrorism prosecutions and will alter course if that is the right and proper thing to do."