Australia's new Prime Minister Kevin Rudd on Thursday said that his government will hold a judicial inquiry into the case of Indian doctor Mohammad Haneef, who was arrested on terror charges and later released due to lack of evidence.

Rudd said that the government is seeking advice on how to fulfill a pre-election commitment to conduct the probe into the case involving Haneef, who was exonerated of terror charges in connection with the failed Glasgow terror plot after being detained for three weeks in July.

The case had triggered a diplomatic row and embarrassed the previous John Howard government. But Rudd insisted that the inquiry was necessary to ensure anti-terrorism legislation was kept accountable.

"What we're on about is establishing the facts," the Labour leader, who ended Howard's 11-year reign, was quoted as saying by the local media.

"We want to make sure that with these tough anti-terrorism laws, we've got the proper institutional arrangements necessary for their enforcement and the proper checks and balances as well" he said.

The Australian Federal Police, the Commonwealth Director of Public Prosecutions and the then Immigration Minister Kevin Andrews came under sustained criticism following a number of blunders in the case, highlighted by the media.

Haneef was arrested at Brisbane Airport on July 2, shortly after the failed terrorist plot, and was granted bail after two weeks. But Andrews cancelled his work visa, prolonging his detention.

Haneef was released on July 27 after the charge of recklessly providing support to a terrorist organisation against him was dropped.

Haneef returned to Bangalore and is currently fighting a legal battle to get his work visa reinstated.