A Libyan politician who is suing the former foreign secretary Jack Straw and the British government for damages after being kidnapped and taken to one of Gaddafi's jails has offered to settle the case for just £3, providing he also receives an unreserved apology.

In a challenge to British government claims that a new generation of secret courts is needed to prevent large payouts to claimants in national security cases, Abdel Hakim Belhaj says he will settle the action – through which one other dissident received a £2.2m pay-out – for a pound each from the government, Straw, and Sir Mark Allen, former head of counter-terrorism at MI6.

Belhaj was leader of the Libyan Islamic Fighting Group, opposing the Libyan dictator, when he and his wife were detained by American intelligence officers at Bangkok airport in March 2004.

Allegedly he was tortured for several days while his wife, who was five months' pregnant, was chained to a wall at a secret prison at the airport. The couple were then flown to Tripoli, where Belhaj spent the next six years in jail.

Now leader of the Libyan Al-Watan party, Belhaj launched proceedings after a number of previously secret documents, discovered in a Tripoli office building during the 2011 revolution, showed that Allen had written to Musa Kusa, Gaddafi's intelligence chief at the time, to claim credit for providing the tip-off that led to the couple's detention.

Belhaj says he was repeatedly tortured in Gaddafi's prisons, and that he was interrogated by UK intelligence officers who knew how he was being treated. His wife, Fatima Bouchar, who had been taped to a stretcher for the 17-hour flight to Tripoli, was detained for four months, being released shortly before giving birth.

Belhaj wrote to David Cameron last week to say that he would settle for just a pound from each defendant, providing each of them unreservedly apologised to his wife and himself.

In his letter, Belhaj says he will "forever be grateful to Britain" for helping the Libyan people topple Gaddafi, and that he is anxious to see good relations between the two countries.

He writes: "For this reason, I am making an open offer to settle our litigation. My wife and I are willing to end our case against the UK government and Messrs Straw and Allen in exchange for a token compensation of a British pound from each defendant, an apology and an admission of liability for what was done to us."

He added that he wanted to lay to rest all claims that he and his wife were bringing the claim to enrich themselves.

"My wife and I suffered deeply during our kidnap and in Libya, and … continue to suffer. My wife may never be the same again. But we have come to court in Britain because we believe your courts can deliver justice. We are primarily bringing this claim to secure a public judgment, recognising the wrongs we have suffered."

His lawyers at Leigh Day and Co, along with Reprieve, the legal charity, say the offer contradicts UK government claims that the controversial secret courts provisions of the justice and security bill, upon which MPs are due to vote on Monday, are needed partly to save the government from making substantial payments to individuals alleging UK complicity in their abduction and torture.

Ken Clarke, the minister responsible steering the bill through parliament, has said the payments are being made not because the claims have merit but because the government needs to protect secret intelligence material.

Clarke has also claimed that this could lead to taxpayers' money being used to fund terrorism, a claim that was dismissed at the weekend as "thoroughly misleading" by the former director of public prosecutions Ken Macdonald.

Macdonald said: "The sad truth is Clarke's comments look like a smokescreen for plans which are aimed not at keeping the British people safe but at sparing the embarrassment of the security services when they get mixed up in wrongdoing."

The bill is also opposed by civil rights and journalists' groups, and hundreds of leading lawyers, who have denounced its provisions as "dangerous and unnecessary" and say it is intended not to protect secret intelligence but to cover up evidence of the British government's involvement in serious crimes after 9/11.

Belhaj says he has no wish to see his case enter the secret court system, which the justice and security bill seeks to introduce.

"I have been a victim of a secret trial before, in Gaddafi's Libya. I did not get to see any evidence or to question any witnesses against me. For all I know there were no witnesses. I was then sentenced to death."

With Scotland Yard inquiring into two UK-Libyan rendition operations, however, it remains to be seen whether any of the defendants in the Belhaj civil claim will admit liability.

Sami al-Saadi, another Libyan dissident, has accepted £2.2m from the British government after he and his wife and four children, the youngest a girl aged six, were abducted in Hong Kong and flown to Tripoli, three days after Tony Blair made his first visit to Libya, embraced Gaddafi for the cameras and announced that they planned to make "common cause" in counter-terrorism operations.

Among the documents discovered in Tripoli was a fax the CIA sent to the Gaddafi government offering to assist Libya and the UK with the "rendition" of the family.

A Foreign Office spokesperson said: "We can confirm we have received a letter from Mr Belhaj. [The government] is co-operating fully with investigations into allegations made by former Libyan detainees about UK involvement in their mistreatment by the [Gaddafi] regime. A police investigation is underway so we are unable to comment further. We are not going to comment on ongoing litigation."