The home secretary was "misled" when she moved to throw a leading Palestinian activist out of the UK, according to an immigration tribunal ruling that strongly criticised her decision and found in favour of his appeal against the government's attempts to deport him.

Sheikh Raed Salah, the leader of the Islamic Movement in Israel, was held in June last year on the orders of Theresa May after he flew into Britain despite being banned from entering the country.

After launching a legal battle against the moves to expel him, he received a letter at the weekend from the Upper Immigration Tribunal stating that the decision to detain him appeared to have been "entirely unnecessary" and that his appeal had succeeded "on all grounds".

Salah, a Palestinian with Israeli citizenship whose legal team claimed he had not been aware of the ban, came to the UK for a speaking tour at the invitation of London-based Middle East Monitor (Memo), but was detained three days later after May served a deportation notice saying his presence in the UK was "not conducive to the public good".

He sought damages for unlawful detention, and the high court ruled that since he was not given "proper and sufficient reasons" for his arrest until the third day of his detention, he should receive damages for that period.

The ruling of the immigration tribunal, which was made known on Saturday, states that May "acted under a misapprehension as to the facts" and was "misled" in relation to a poem written by Salah.

It also decided she took "irrelevant factors" into account in relation to indictments against Salah, and a conviction in Israel in 2003 over charges that his organisation funnelled funds to a banned charity in Gaza.

The ruling stated: "We have no difficulty in concluding that the Secretary of State's decision has not been shown to be proportionate to the need to preserve community harmony or protect the United Kingdom from the dangers to which the policy refers. On the contrary, the position is that it appears to have been entirely unnecessary to achieve that purpose. lt follows that as was as a disproportionate interference with the appellant's Convention rights, the human rights grounds are made out."

The Home Office said it was disappointed by the tribunal's decision: "We are considering the detailed judgment, and if we can appeal, we will."

Bail conditions following his release are still in place so Salah is unable to comment, but the Palestine Solidarity Campaign hailed the ruling as a "very important day for British justice".

"By arresting, imprisoning and attempting to deport Sheikh Raed Salah on what the judge has determined as a 'misapprehension of the facts', the British government have acted in a shameful way," Sarah Colborne, the PSC's director, said.

Dr Daud Abdullah, the director of Memo, said that the decision was "a landmark for freedom of speech as well the rights of Palestinians to campaign against injustice at home and abroad". "Sheikh Raed Salah is an outspoken critic of his government's discriminatory policies in Israel and the occupied Palestinian territories, and it is entirely appropriate that a leading law officer in Britain has seen through the propaganda and stated clearly that someone, a group or an individual has 'misled' the home secretary on such an important matter."

May has said in the past the government excluded people such as Salah because it wanted to take action early "rather than simply waiting until people have gone down the route of violent extremism".

Emails that emerged in the course of legal proceedings indicate a measure of the haste with which May's office moved to exclude Salah.

Just 17 minutes after receiving a report on him, prepared by the Community Security Trust, a UK charity that monitors antisemitism, Faye Johnson, private secretary to the home secretary, emailed about a parliamentary event Salah was due to attend.

"Is there anything that we can do to prevent him from attending (eg could we exclude him on the grounds of unacceptable behaviour?)" she wrote. The CST's report said Salah's record of provocative statements carried a risk that his presence in the UK could have "a radicalising impact" on his audiences.

UK Border Agency officials were dubious and a senior official wrote to May, saying that while there was evidence that would allow the home secretary to exclude Salah on the grounds of unacceptable behaviour, "the disputed underlying evidence could make an exclusion decision vulnerable to legal challenge."

The immigration tribunal had been told that the home secretary acted on information provided to the government by the CST and the Jewish Board of Deputies.

In its ruling, it said that "it is of concern" that May apparently did not consult any Muslim or Palestinian organisations. It noted the evidence of Robert Lambert, a retired head of the Metropolitan police's Muslim Contact Unit, and David Miller, a sociology professor from the University of Strathclyde in Scotland who set up the Spinwatch site, "that whereas the CST has done invaluable work in identifying threats to the Jewish community in the UK from the far right such as the British National party (BNP), it failed to distinguish between antisemitism and criticism of the actions of the Israeli state and therefore gives an unbalanced perspective, but they did not say that it was improper for the secretary of state to seek the views of the CST in this matter."

The evidence of a civil servant at the Home Office was also that May "gave this issue serious consideration and looked upon all of the evidence with a discerning eye".