Lawyers for Khalid al-Fawwaz, a Saudi citizen who alleged acted as Osama bin Laden's public relations representative in London, received ?250,000 in legal fees from the Legal Services Commission according to documents released under the Freedom of Information Act.
Al-Fawwaz, is wanted in connection with the bomb attacks on two US embassies in East Africa in August 1998.
The attacks in Nairobi, Kenya and Dar es Salaam, Tanzania killed 223 people and injured more than 4,000.
British taxpayers also covered nearly ?110,000 in legal bills for al-Fawwaz's co-defendant, Adel Abdel Bary, an Egyptian who was allegedly close to Ayman al-Zawahiri, the deputy leader of al-Qaeda.
Nearly ?215,000 was paid in legal costs for a second associate, Ibrahim Eidarous who died of leukaemia in July while under house arrest in London.
Most of the fees were paid in the first three years of their battle, legal sources said yesterday, and most of the costs went to barristers in the case.
The legal battle was lengthened by a six-year wait for a response from the Home Office after the Government lost a case in the House of Lords in December 2001.
The Daily Telegraph reported earlier this year that al-Fawwaz and Bary have now launched a new appeal in the High Court that is likely to prolong the case for several more years.
The total cost, including detaining the men in maximum security prisons, is estimated to have exceeded ?1m.
But the attempt to have them extradited has provoked derision across the Atlantic.
The Washington Post reported last week that British justice was working at a "glacial pace" and added: "The cases have plodded through the British bureaucracy with no end in sight, undermining transatlantic cooperation on counter-terrorism and highlighting how easy it can be for international terrorism suspects to elude the reach of US prosecutors.
"Critics say the combination of free lawyers and a Byzantine legal system enables al-Qaeda sympathizers in Britain to file frivolous appeals and avoid deportation or extradition."
Britain passed a new "fast track" extradition law in 2003 but only one terrorism suspect has been sent to the US since September 2001, Syed Hashmi, a US citizen charged with supplying military equipment to al-Qaeda training camps in Pakistan.
The issue was raised last week at a meeting in London between Jack Straw, the Justice Secretary, and Eric Holder, the US Attorney General, who praised the new system.
But he was referring to extraditions for fraud and other cases which have been made under the laws, rather than terrorist offences for which it was designed.
Daniel Coleman, a retired FBI agent who investigated the embassy bombings, accused the British last year of "trying to thumb their nose at us" and added: "They view us as the Belgian Congo. It's insulting to the United Sates. Our justice system is better than theirs."
The Home Office attributed a six-year delay between December 2001 and March 2008 to "a range of matters," including allegations from defence lawyers that the US government might subject their clients to the death penalty, torture, military tribunals or criminal trials that would be inherently unfair.
In his latest appeal, Fawwaz claimed his human rights would be breached if he were sent to an American "supermax" prison and that evidence in US courts was reliant on deals struck with informers.
The case is likely to go back to the House of Lords and the European Court of Human Rights, which has already been considering another terrorism case, that of Babar Ahmad, accused of running al-Qaeda websites, for two years.
The radical preacher Abu Hamza and his alleged associate Haroon Aswat are also fighting their extradition.