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The journalist walked free from a Jerusalem prison some 24 hours after his arrest and immediately complained to waiting journalists of mistreatment.
Senior Israeli security officials said late Thursday in Tel Aviv that Hounam would be expelled from the Jewish state "with his consent" and return to London on Friday, and that he would be barred from ever returning to the country.
"I'm not a spy on nuclear things ... I do not think that they (the Israeli security forces) did a very good job," the former Sunday Times reporter said.
"I've been through some difficult experiences," he said, complaining that he had been deprived of sleep and prevented from speaking to his wife.
The leader of the House of Commons Peter Hain told the British parliament earlier Thursday that the government in London was "very concerned" about the arrest and had sought more information from Israel.
Hounam, who broke the Vanunu story in Britain's Sunday Times in 1986, was arrested late Wednesday in Jerusalem by Israel's Shin Beth internal security services, officials said.
The British journalist's arrest came a month after Vanunu, a former technician at the Dimona nuclear plant in southern Israel, walked free after 18 years in prison for revealing secrets about the Jewish state's nuclear program.
Hounam, who left the Sunday Times a few years ago and now works as a freelance journalist, reported on Vanunu's April release for the British newspaper and was working on a documentary for the BBC.
Senior security officials said he had secured an exclusive interview with Hounam for the BBC, in violation of Israeli restrictions on Vanunu, who is barred from talking to foreigners without prior security service authorization.
Vanunu's requests to meet with Hounam were denied, the officials said.
To get around the ban, they alleged, Hounam asked a pro-Vanunu Israeli activist, Yael Lotan, to conduct the interview with Vanunu on his behalf, and coached her through the three-hour session last Saturday.
Israeli officials have thus far confiscated five videocassettes containing excerpts of the interview, but admitted they did not know how many copies existed.
The security officials added that the investigation was ongoing, and that they were reviewing the tapes to see if Vanunu had violated restrictions that forbid him from speaking about his work at the Dimona plant.
When asked why Vanunu had not been detained, officials said they would question him when and if the time were right.
Hounam was arrested while en route to a meeting in Tel Aviv with Lotan, according to media reports.
The agents subsequently escorted Hounam to his Jerusalem hotel, searched his room, confiscated various documents and then took him away for further questioning, the Haaretz newspaper reported.
Amnesty International researcher Donatella Rovera, who witnessed the scene at the hotel, told army radio that Hounam was taken away by "five plainclothes security service agents".
"As they were taking him away to an unknown destination, he told me he had been arrested and that I must alert The Sunday Times and other media," Rovera said.
Vanunu was abducted by Israeli secret service agents in Italy, smuggled back to Israel and then jailed in 1986 after leaking top-secret details about the Dimona plant to the Sunday Times.
He was freed on April 21 after 18 years in prison, but is now subject to a series of sweeping restrictions, including a ban on travelling abroad as well as holding unauthorized meetings with foreigners.
Britain's ambassador to Israel, Simon McDonald, held talks Thursday with Israeli Justice Minister Tommy Lapid, Israeli and British officials said, at which the Hounam issue was raised.
The BBC also expressed concern about Hounam's arrest, but did not release any information about the content of its planned documentary.
"I don't know why Peter Hounam was arrested but this is obviously just a new episode in the campaign to persecute Mordechai Vanunu," the whistleblower's brother, Meir, told AFP.
An opposition Labor member of the Israeli parliament, Yuli Tamir, condemned Hounam's detention, saying: "This arrest is dangerous for democracy."
Israel has never acknowledged having a nuclear arsenal but foreign experts believe it has produced between 100 and 200 nuclear warheads.
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