The UK should expect more suicide bombings, the independent reviewer of the terrorism laws has warned.
Lord Carlile, who has access to sensitive intelligence reports, says there is a "real and present danger of shocking terrorism acts".
He says using control orders on terror suspects, rather than holding them in jail, has not put security at risk.
The home secretary has promised MPs a full debate on whether the terror laws should be renewed this year.
The laws have to be approved by Parliament annually.
'Effective protection'
Control orders impose restraints which range up to house arrest.
They were controversially introduced last year after the courts said the government could no longer detain suspects indefinitely without trial.
Eighteen control orders were used last year, with nine of them still in place by the end of the year.
Lord Carlile says there have been concerns about "family and other arrangements" for the suspects, but not on security.
"In practical terms control orders have been an effective protection for national security," he says.
'Safety valve'
Lord Carlile says he would have made the same decision as Home Secretary Charles Clarke in imposing control orders in each of the cases.
But he says some of the suspects under the orders should be investigated further to see whether they can be prosecuted and convicted in the courts.
The QC says the control order system as it has been used so far is a "justifiable and proportional safety valve for the proper protection of civil society".
He warns: "Further suicide bombings in the UK must be expected, and the targets are unpredictable."
Improvements urged
Lord Carlile wants the control order system tightened up in two key ways.
Police chiefs should give clear reasons why there is not enough evidence to put the suspects on trial in court rather than using the orders - something Lord Carlile says does not currently happen.
And the Lib Dem peer presses for officials to meet regularly to ensure whether the restrictions imposed in the order are the minimum necessary.
He says he is "alive to the potential psychological effects of control orders".
House arrest has not been used yet but Lord Carlile said the restrictions were "extremely restrictive" and close to what would need an opt-out from European human rights laws.
They included 18-hour curfews, limits on visitors, searches, bans on using mobile phones and the internet and travel restrictions.
More terror laws ahead
The government is trying to reach agreements to ensure they can deport foreign suspects without fear they will be tortured.
Some of people have been taken off control orders and arrested under deportation rules.
Lord Carlile says he has "real concern" about detaining such people who cannot in practice be deported at the moment.
It would have been better for ministers to have agreed deals with other countries before detaining these people, he says.
Home Secretary Charles Clarke told MPs he accepted all of Lord Carlile's recommendations for improving the system in principle.
The government would publish draft legislation in the first half of next year, said Mr Clarke.
He wanted to look at whether the range of different anti-terror laws could be merged into one single Act of Parliament, he said.
Officials were also looking at how phone-tap evidence might be used in court and would report later this year, he said.
'Abuse of process'
Conservative shadow home secretary David Davis said anti-terror laws needed "pruning".
They had been used in 29,000 cases over the last year, he said, including people heckling at the Labour Party conference or going down cycle paths.
Lib Dem home affairs spokesman Alistair Carmichael stressed that control orders must only be used as a last resort.
And he said the worries voiced by Lord Carlile about deportation detentions seemed "dangerously close" to being an abuse of process.
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