Mr Arar was imprisoned in Syria for almost a year

Maher Arar was detained in the US while returning to Canada from Tunisia. He has dual Syrian-Canadian citizenship.

A Canadian government inquiry cleared him of any involvement in terrorism. Syria denies that he was tortured.

PM Stephen Harper said Mr Arar would receive $10.5m (US$8.9m, £4.54m) compensation, and urged the US to drop him from its list of terror suspects.

"On behalf of the government of Canada I would like to apologise to you... and your family for any role the government may have played in the terrible ordeal that all of you experienced in 2002 and 2003," Mr Harper said.

Mr Arar had sought $37m (US$31.3m, £16m) in a civil suit.

The Canadian inquiry that exonerated Mr Arar said it was probable that US authorities were acting on information provided by Canadian authorities.

It also supported Mr Arar's claims to have been tortured during his time in Syria.

Post-traumatic stress

In 2002 Mr Arar was returning from a family holiday in Tunisia when he was stopped by US officials as he changed planes in New York.

He was deported to Syria where he spent nearly a year in prison.

Since then the 36-year-old software engineer has suffered from depression and post-traumatic stress disorder.

The head of the Royal Canadian Mounted Police resigned over the case late last year.

The BBC's Lee Carter in Toronto says the case has left the Canadian government in sharp disagreement with the US.

Despite repeated calls from Canada to drop Mr Arar from its security watch list, the US refuses, saying it has reasons of its own to keep him on the list.