Alan Waters, a retired naval officer, was acquitted along with Duncan Grant, a charity worker, by judges at Bombay High Court today, who cited 'lack of evidence provided by the prosecution'.

In 2006 a lower court found the two men guilty of sexually abusing children, sentenced them to six years in prison and fined them £20,000.

An Indian man, William D'souza, who managed the shelter and was convicted of aiding and abetting their crime, was also cleared.

Indian police issued an international warrant for Mr Grant's arrest in April 2002, and in June 2005 he travelled to Bombay and handed himself in on the advice of his lawyers.

A 2001 police report accused him and Mr Waters of sexually abusing boys
at the Anchorage home for street children which Mr Grant set up in 1995.

Mr Waters, from Portchester, was arrested at New York's John F Kennedy International Airport in 2003 on the basis of an Interpol arrest warrant, and was extradited to face charges in India.

Sabine Zanker, the head of the legal team at Fair Trials International which helped the men fight their appeal, said she was pleased but surprised by the court's decision.

'The judge said there was no merit in the prosecution case, and we expect them to be released soon,' she said.

'I really didn't think this was possible - in cases like this the
charges always stick.

'They will be delighted. They were very anxious to be acquitted and move on to remove this stigma.'

The men are now expected to the return to the UK.