The Justice & Security Bill is to allow the courts, through the 'limited use of closed proceedings', to consider all material relating to a case without needing to disclose information that could risk national security.
The government says its purpose is to 'respond to the challenge of using sensitive information in civil proceedings where the government is party, without risking disclosure contrary to the public interest'. It will also 'enhance the current oversight regimes' of the security and intelligence agencies.
Justice Secretary Kenneth Clarke has argued that closed sessions will enable the government to defend itself robustly and avoid having to settle a case rather than disclose sensitive material.
Proposals to extend the use of secret hearings appeared in a Justice and Security green paper published in October 2011. The proposals were criticised by parliament's joint committee on human rights, which said the paper failed to justify a change in the law and that all other options should be explored before the government resorted to holding trials in secret.
The committee called on the government to bring forward legislation to clarify how 'public interest immunity', which allows sensitive material to be protected from disclosure, should be applied to cases involving national security.
The green paper arose from the case of a former Guantanamo Bay inmate who applied to the English courts for compensation. The government was unable to defend the claim without disclosing material that, in its view, could have risked national security.
The move is likely to face widespread opposition. The Law Society said: "There is no doubt that the work of the security services will sometimes be sensitive and therefore not for the public eye, but that needs to be balanced sensibly with the need for our justice system to be transparent, and the principle of holding the government to account.' It said the bill's secret justice proposals 'must not become a cloak for a government to hide its blushes nor be allowed to deny justice to deserving cases'.
The government aims to debate and enact the Justice & Security bill during the life of this parliament.