The last man to be sentenced to death in the UK has had his conviction quashed after a court heard that he confessed to the crime after being waterboarded and subjected to death threats. His successful appeal comes 39 years after his death sentence was commuted to life imprisonment.

Liam Holden served 17 years behind bars after being convicted of being the IRA sniper who shot dead Frank Bell, a teenage member of the Parachute Regiment, in west Belfast in 1972.

Holden's conviction was quashed after the court of appeal heard that he had signed a confession only after being taken to an army base near to the scene of the shooting and subjected to waterboarding and death threats.

More significantly, inquiries by the Criminal Cases Review Commission discovered evidence that the army's practice of detaining and questioning suspects at that time was unlawful, potentially opening an avenue of appeal for other people convicted of terrorism offences during the early years of the conflict in Northern Ireland.

The lord chief justice, Declan Morgan QC, told the hearing in Belfast: "We feel that we have a sense of unease about the safety of this conviction and are minded to allow the appeal." The court's full judgment is to be given at a later date. The prosecution announced last month that it would not be opposing the appeal.

Holden, 58, was in court surrounded by family and friends to hear the decision. Outside court he said: "I am delighted after 40 years that the conviction has been quashed, I am just sorry the parents are not alive to witness it."

His solicitor Patricia Coyle said: "He and his family are grateful that they are dealing with an appeal hearing and not a posthumous pardon."

Shortly after Holden's sentence was commuted to life imprisonment by the then Northern Ireland secretary William Whitelaw, capital punishment was abolished in Northern Ireland, bringing it into line with the rest of the UK.