'Tickets to a Manchester United game found during anti-terrorist raids sparked fears of a suicide attack on Old Trafford. But they were for an old match and had been kept as souvenirs by the suspects, who were fans of the club.
The revelation will lead to further criticism of the operation which led to the arrest of 10 people by armed Greater Manchester police in dawn raids last month. All have since been released without charge.
Claims that the group - mostly Iraqi Kurds - was plotting to hit a major target such as a shopping centre or a football stadium were widely reported, but turned out to have no substance.
The Observer has learnt that the Attorney General, Lord Goldsmith, was aware that the Sun was planning to run a story claiming that Old Trafford was a target, but decided against issuing an injunction against the paper.
A spokeswoman from the office of the Attorney General confirmed that an injunction was discussed: 'The Attorney General was made aware that there might be an issue over some press reporting.' But the decision was made that action 'would not be appropriate'.
Goldsmith acted to stop the publication of photographs of terrorist suspects arrested across the south-east last month because it was believed it might invalidate identification parades involving the men.
One Whitehall source told The Observer that there was serious concerns within government about the press coverage of the Old Trafford story. It was thought likely at an early stage in the investigation that the suspects were unlikely to be charged.
Speaking for the first time about the events, one Iraqi Kurd arrested during the Manchester raids told The Observer that he was not informed of any specific terrorist charges against him and they were simply asked general questions, including what they thought of the war in Iraq.
Police found photographs of him taken at a United game when they searched his flat. Yates confirmed that the tickets discovered in the raids were old: 'Most young men in the area are Manchester United fans,' she said.
Hishyar Abid, chairman of the local residents' association, said: 'Iraqi Kurds have have suffered from mass extermination, mass graves and seen thousands of our villages destroyed. But even in our most desperate times we never resorted to terrorism against innocent people. Abid pointed out that Kurds in Iraq were being targeted by al-Qaeda every day. 'We are in the fight against terror too. On 1 February supporters of al-Qaeda sent suicide bombers to the headquarters of a Kurdish party in Iraq and killed our Prime Minister.'