In a dramatic reversal on the eve of President Bush's nomination acceptance, the Justice Department (search) acknowledged its original prosecution of a suspected terror cell in Detroit (search) was filled with a "pattern of mistakes and oversights" that warrant the dismissal of the convictions.

In a 60-page memo that harshly criticizes its own prosecutors' work, the department told U.S. District Judge Gerald Rosen (search) on Tuesday night it supports the Detroit defendants' request for a new trial and would no longer pursue terrorism charges against them. The defendants at most would only face fraud charges at a new trial.

The Justice Department is "concurring in the defendants' motions for a new trial" and asks the court to dismiss the first count of the original indictment charging the defendants with material support of terrorism, the government's filing said.

The department's decision came after a monthslong internal investigation uncovered several pieces of evidence that prosecutors failed to turn over to defense lawyers before the trial last year. The probe exposed deep differences within the government over the course of the case and the quality of the prosecution's evidence.

The internal investigation of prosecutorial misconduct found enough problems that there is "no reasonable prospect of winning," the government conceded, drawing back from a case once hailed by the Bush administration as a major victory in the war on terror.

"In its best light, the record would show that the prosecution committed a pattern of mistakes and oversights that deprived the defendants of discoverable evidence (including impeachment material) and created a record filled with misleading inferences that such material did not exist," Justice told the court.

The decision was hailed by lawyers for the Detroit men who were convicted last year.

"We're extremely grateful," William Swor, lawyer for defendant Abdel-Ilah Elmardoudi, said Wednesday. "It's a major victory."

Swor said the dropping of the terrorism charges leaves the government with "a garden-variety document case" against his client. "Our work is just beginning."