The men, who were jailed by a judge who said they had become "intoxicated" by extremist propaganda, had their convictions quashed at the Court of Appeal.

All were present in the dock of a crowded courtroom yesterday to hear the Lord Chief Justice Lord Phillips order their release.

Mohammed Irfan Raja, 20, of Ilford, east London, and Bradford University students Awaab Iqbal, 20, of Grove Terrace, Bradford; Aitzaz Zafar, 21, of Bishop Street, Rochdale, Lancashire; Usman Ahmed Malik, 22, of Laisteridge Lane, Bradford, and Akbar Butt, 21, of Southall, west London, were all later freed from the cells at London's Law Courts.

At the Old Bailey in July last year they were convicted of offences of possessing articles for a purpose connected with the commission, preparation or instigation of an act of terrorism, contrary to section 57 of the Terrorism Act 2000.

Raja was serving two years youth detention, Zafar and Iqbal had been given three years detention, Malik was sent to prison for three years and Butt was given 27 months detention.

Defence lawyers said afterwards that the effect of the court ruling was that it was permissible to download such material so long as there was no intention to use it.

Usman Malik's solicitor, Saghir Hussein, said: "This is a landmark judgment in a test case over the innocent possession of materials, including books and speech, and the court has finally agreed that this is in no way connected to terrorism."

The ruling would have implications for other cases, such as those "alleging the glorification of terrorism."

Imran Khan, solicitor for Mr Zafar, said the judgment had made it absolutely clear that possession of material must be for intent to use it unlawfully. Young Muslims seeking to explore the world of their religion should no longer be victimised, he said.

Speaking on Channel 4 News, Usman Malik said: "I'm very happy, it's been two long years. My case started in March 2006 and I'm glad that it is finally over."

Mr Malik refused to answer when asked if he supported jihadism.

He acknowledged he was "inquisitive" and had wanted to "find things out" for himself and had looked at material for research purposes.

But he said: "What I had was just ideological, just material. Nothing was actually – there was no manuals or anything."

When asked again if he supported jihadism, he said: "I prefer to talk about my personal views."

His father, Abdul Malik, said the ruling was a victory for common sense.