The British Parliament remained deadlocked Friday over Prime Minister Tony Blair's (search) proposed anti-terrorism law, as authorities prepared to release on bail eight foreign terrorist suspects locked up for three years without charge.

Despite debating throughout the night, the government and opposition parties failed to reach a compromise on the Prevention of Terrorism Bill (search).

Blair insists the proposed measures, including house arrest, curfews and electronic tagging for terror suspects without trial, are vital to protect Britain (search) from attack. Opponents want to water down the legislation, saying it is flawed and would erode civil liberties.

"The liberty of the individual must be protected, miscarriages of justice must be prevented," said Conservative Party lawmaker Dominic Grieve.

Opponents refused to back down on their demands that the law expire within a year of passage and that the government must not impose the orders merely on the suspicions of intelligence services.

The government is fighting to pass the new law before Monday, when emergency legislation allowing it to detain foreign terror suspects indefinitely without trial expires.

Britain's highest court has ruled that law illegal. An Algerian man held for three years without charge was released on strict bail conditions late Thursday and eight more men, including Muslim cleric Abu Qatada, are expected to be released under similar terms soon. Qatada has been described by several Western governments as Osama bin Laden's "spiritual ambassador in Europe."

The government says that when the law expires on March 14, the bail orders will be unenforceable and insists Parliament must grant it new powers urgently.

Blair already has the backing of the House of Commons, where he has a majority. But the House of Lords, where the Conservatives are the largest grouping, repeatedly overturned the government's proposals overnight Thursday and into Friday. The bill will bounce back and forth between the chambers, being amended and re-amended, until one side gives ground.

The new control orders would include restrictions on using the Internet or telephone, curfews, house arrest and electronic tagging. The government says the law would be used sparingly and only against suspects who could not be tried in court because evidence against them would be too sensitive to reveal publicly.

Only a judge would be allowed to order house arrest. But in emergencies, the government has reserved the right for a minister to impose the lesser controls, as long as a judge is consulted within seven days.