A government statement said the cabinet headed by Prime Minister Manmohan Singh had yesterday decided to replace the Prevention of Terrorism Act (POTA) with a new law.

"It is important to note the intention of the government is to protect the rights of people vis-a-vis the misuse of POTA," the statement said, adding the government was fulfilling a promise it made after coming to power in May.

"The (ruling) United Progressive Alliance has been concerned in the manner in which POTA has been misused in the past two years ... The act will be repealed without compromising in the fight against terrorism."

The earlier Unlawful Activities Prevention Act would now be upgraded to incorporate certain provisions to deal with terrorism, it said.

Home Minister Shivraj Patil, meanwhile, said groups or organisations banned under POTA would remain outlawed but said the scrapped law's replacement would carry milder provisions.

"It will however have provisions to effectively tackle and check the menace of funding of terrorist organisations," he said.

The statement gave one year for all pending POTA cases to be reviewed by a committee.

"After one year everything will come to an end," Patil said.

Home ministry officials said 217 cases being investigated under POTA and 116 cases in court would be reviewed by the special committee.