The Libyan, who was captured by US special forces on 5 October in a suburb of Tripoli, was held for a week on board a US warship, the San Antonio, where he was interrogated outside the normal safeguards of civilian law. Controversy raged over his judicial fate – whether he would be sent for military captivity at Guantánamo Bay like most other al-Qaida suspects before him, or face civilian justice in the US criminal court system.

In the end, Liby, 49, was brought into court 24A of the federal district court for the southern district of New York in downtown Manhattan, having been charged aboard the ship on Saturday. Wearing a black shirt and grey sweatpants and with a long white beard partially dyed brown, he walked into the courtroom with his hands cuffed behind his back and treading heavily in socks and flip-flops.

The handcuffs were removed as he sat at the defence bench, a green copy of the Qur'an on the table in front of him. It was reported that part of the reason he was brought to New York to face a civilian criminal trial was that he fell ill soon after his capture.

Asked by the judge through a translator how he wished to be addressed, Liby gave his full name: Nazih Abdul-Hamed al-Ruqai. He pleaded not guilty in the arraignment to the charges against him that were set down by a grand jury as long ago as 1999.

The team of US prosecutors told the court that Liby would not face the death penalty.

The 150-page indictment accuses Liby of helping to plan the attack on the US embassy in Nairobi, Kenya, where 212 people died in a car bombing in August 1998, and a co-ordinated attack on Dar es Salaam in Tanzania.

Given his alleged association with al-Qaida in a seminal stage of the terrorist network’s development, US intelligence agencies saw him as a source of potentially important information. But the manner of his capture, denounced by some critics as rendition, and his prolonged questioning without charge beyond US jurisdiction, brought the US government back onto uncertain legal ground.

The judge, Lewis Kaplan, ordered that Liby be held in custody. "I find that the defendant is definitely a flight risk and there are no conditions in which he could be released whereby his return for trial could be assured."

His temporary defence lawyer, David Patton, said that given the length of the indictment he had only been able to brief Liby in broad terms about the charges against him. A permanent defence lawyer will be appointed by the court, with the next hearing scheduled for 22 October.