Scotland Yard faces a legal battle over claims of unlawful arrest of a senior Special Air Service (SAS) officer said to have been "treated like a terrorist" by armed police.

The individual, who cannot be identified for legal reasons, was one of two British army officers arrested during an investigation by the Metropolitan Police into leaks of government secrets to Sky News. The officer was driving through Hereford with one of his young children when, it is claimed, he was stopped by armed police surrounding his vehicle.

"It was a disgrace," said a senior figure speaking on condition of anonymity. "He was treated as if he were a terrorist." Charges of breaching the Official Secrets Act were subsequently dropped and the officer, who has since left the Army, has instructed his lawyers to start legal proceedings against the force.

Download the new Independent Premium app Sharing the full story, not just the headlines

In a statement last night, the officer's lawyer, Simon McKay, said: "I confirm that I act for a former special forces officer, known as AB. He was arrested by the Metropolitan Police in 2011 but the investigation was unconditionally dropped last year. He has now engaged the pre-action protocol with the Metropolitan Police's legal department in connection with a damages claim for, amongst other things, unlawful arrest."

It is understood the arrests took place after Lieutenant-General Jonathan Page, former director of special forces, asked detectives to investigate suspected breaches of the Official Secrets Act in the wake of a series of stories by the Sky News journalist Sam Kiley. "Lt-Gen Page was sick to the back teeth of all the leaks, and fingers were being pointed at the regiment," said a senior military figure speaking on condition of anonymity.

Detectives claimed offences had been committed under Section 1 of the Official Secrets Act. Information had allegedly been leaked from "high-level Cabinet Office briefing room A (Cobra) meetings" relating to "military operations overseas and in the UK". This included information about special forces operations and military tactics which "was likely to have endangered the lives of military personnel", according to court documents.

Mr Kiley, now Sky's Middle East correspondent based in Jerusalem, is thought to have been in contact with at least four military officers, including a member of the Defence Board and one of the country's most senior commanders. It is not known if the two high-ranking officers were also investigated. Police arrested the other two in 2011.

The Metropolitan Police attempted to force Sky to hand over copies of emails between Mr Kiley and those arrested. But Sky appealed and managed to get the court order quashed in December 2011. High Court judges did not find grounds to suspect that information had been disclosed "which was likely to cause or to have caused damage to the security or intelligence agencies or to their work."

The charges against the two officers were subsequently dropped and they have since left the Army.

It is not known whether the other man arrested intends to take action against the police. A police spokesman said proceedings had not been issued against them. The Ministry of Defence also declined to comment. In a statement, a spokesman for Sky stressed that Mr Kiley was not arrested as part of the police investigation.

Members of the SAS are said to be upset at the way the two men were apparently singled out for arrest. One source said: "Going after two of the men like this does nothing for morale." They accused Lt-Gen Page, who recently stepped down as director of special forces, of seeking to "make an example" of the men.