The pilot falsely accused of training the hijackers responsible for the 9/11 terrorist attacks has won his almost decade-long miscarriage of justice battle.

Lotfi Raissi, an Algerian living in Britain who lost his career as an airline pilot, suffered wrongful imprisonment and damage to his health, will now be eligible for up to £2m compensation.

Raissi became the first person to be accused of participating in the 2001 attack in New York and Washington. He was held for five months in Belmarsh high security prison in London and told he would be charged with conspiracy and murder in the US where he could face the death penalty.

Today he described the last nine years as "hell" but said he was delighted with the decision by Jack Straw, the justice secretary. "I have suffered such a great injustice, I'm grateful for this verdict. They took almost 10 years of my life and now I'm starting to breathe again."

He added: "I've been exonerated, not just by a court, but by the British government. Now I can turn the page, but I can never forgive them for what they did."

Raissi's solicitor, Jules Carey, said: "The ministry of justice has formally notified me that the justice secretary has found that Mr Raissi is 'completely exonerated' of the allegations of terrorism. The allegations of terrorism were utterly ruinous to him both personally and professionally."

Carey said the decision to compensate Raissi on the grounds of "exoneration" rather than "serious default" by a public authority was "extremely unfortunate" as it meant that mistakes made by the CPS and the Metropolitan police in the case, identified by the court of appeal in 2008, would now not be investigated.

James Welch, legal director at human rights charity Liberty, said: "The shabby treatment of this innocent man is a chilling reminder of why we all need the protection of the courts."

Raissi's arrest, at his home in Colnbrook, Berkshire, 10 days after the 9/11 attacks, followed an extradition request from the FBI. In court, where he awaited extradition to the US on a holding charge, he was described by British lawyers representing the US as one of the lead instructors of the four hijackers.

A judge threw the case out in 2002 and said there was no evidence against him. Since then, Raissi has sought an apology. In 2008, in a judgment that exonerated him, three court of appeal judges condemned the Met and the CPS for abusing the court process, presenting false allegations and not disclosing evidence.

Today, a Ministry of Justice spokesman said: "After careful consideration of all the relevant material available to him, the justice secretary, Jack Straw, has notified Mr Raissi that he is eligible for compensation."