Yesterday's decision by the House of Lords that Gen Augusto Pinochet does not have immunity from prosecution firmly thrusts the affair back into the political arena.

The job of deciding the fate of the 83-year-old former Chilean dictator will now fall to the British Home Secretary, Mr Jack Straw, who has until next Wednesday to decide whether to allow the formal Spanish request for extradition to be heard by the courts.

Rumour has been circulating at Westminster for weeks that Mr Straw would allow the general to fly home in deference to Chile's internal peace process.

Mr Straw and senior legal advisers to the government are said to be keen to end the drama and would use the domestic pact in Chile, whereby left and right agreed to leave Gen Pinochet alone, as justification for allowing him home.

There is also believed to be concern that a decision to extradite the general could leave the government open to claims of hypocrisy; Britain has no more right to upset the delicate balance of Chile's internally agreed peace process than the Chileans have to involve themselves in Northern Ireland.

Whatever Mr Straw decides will herald what is certain to be another long and protracted legal battle over Pinochet's future. The British Home Office has been keen to stress that the matter will remain in the hands of the judiciary as the Home Secretary's decisions in extradition matters can be appealed through the courts.

The 300-page formal request from the Spanish government for Pinochet's extradition landed on the Home Secretary's desk on November 11th. Drafted by a campaigning Spanish judge, Mr Baltasar Garzon, and approved by the Spanish cabinet, the document accuses Pinochet of genocide, torture and terrorism and implicates him in 3,178 murders or "disappearances" during his 17-year rule.

There are also arrest warrants pending from the Swiss and French authorities, although these will come into effect only if the Spanish warrant fails.

The Home Secretary has discretion on whether to act at all and in theory could decline to issue the order.

But in practice, lawyers say, the International Convention on Torture, which obliges states like Britain which have ratified it to prosecute or extradite, will force him to act. If he declines, he is certain to face an application for judicial review.

Mr Straw will take four criteria into account when he makes his decision: whether the alleged offences are extradition crimes; if the request has been properly authenticated; if the offences are of a political nature; and if there are any compassionate circumstances.

The Home Secretary is being advised on his options by a leading QC, and is open to representations from interested parties until next Monday.

Lawyers for Pinochet have spent the last two weeks preparing submissions to the Home Secretary. They are believed to highlight the ramifications of the Pinochet case on the delicate political situation in Chile.

Britain's extradition process is one of the slowest in the world, and lawyers reckon Pinochet could languish in Britain for at least two years.

If Mr Straw issues an authority to proceed, the matter will then return to the magistrates' court. The magistrate will consider various matters including whether the crime is an extradition crime (an offence serious enough to warrant at least 12 months in prison), whether it is a crime in both Britain and Spain, and whether the offences are political offences.

If the magistrate decides to commit Pinochet to custody to await extradition, he can apply for habeas corpus (an application to the court to release somebody on the grounds that he is being unlawfully held).

So far Pinochet has made only one application for habeas corpus, as well as judicial review, but there is likely to be plenty of scope for more as the extradition process goes on.

Once the legal process is exhausted, if Pinochet has been unsuccessful the Home Secretary will again have a discretion whether or not to surrender him.

He could decide not to do so on the grounds of old age or poor health, but again his discretion would be subject to Britain's international treaty obligations, and any refusal to surrender could be open to judicial review.

If Mr Straw decides next week that Pinochet should not be extradited to Spain he will find himself in conflict with the majority of the Labour Party, both among his cabinet colleagues and with grassroots support.

Many members of Mr Blair's cabinet had been among Pinochet's most ardent critics while he was in power, and when he was arrested on October 16th word went out that the Foreign Secretary, Mr Robin Cook, was privately delighted.

The Trade Secretary, Mr Peter Mandelson, went a step further, declaring in an interview that it would be "gut-wrenching" to see Pinochet granted diplomatic immunity.

But while the Labour Party was for the first time united behind Mr Mandelson, a few days later reality was beginning to set in at Downing Street.

A major diplomatic incident was looming, and the order went out that ministers should refrain from making personal comments about the affair and treat it as a purely judicial matter.

Yesterday an aide of Mr Mandelson said he would not be commenting on the law lords' ruling.

Asked why Mr Mandelson had commented at the time of the arrest, the spokesman said Mr Mandelson's word "gut-wrenching" had referred to Gen Pinochet's grounds for claiming diplomatic immunity, but he had no view on whether he should be extradited.

No one at Westminster will believe that, just as they will not believe other ministers who claim neutrality.

Yesterday a veteran left-winger, who was not directly involved with the Chilean protesters, warned Mr Straw: "He will be finished. He can't let him go." He added that Mr Straw could easily wash his hands of the affair by saying he would respect the wisdom of the law lords.

As for pleas by Gen Pinochet's supporters to release him on compassionate grounds, he could leave that for the Spanish to decide.

A number of ministers have been subject to a dis-information campaign run by supporters of the general. It was alleged that Chile under the rule of Salvador Allende was also subject to gross violations of human rights; a claim roundly rejected by Amnesty International.

Yesterday's decision means that, health permitting, Pinochet will make his first public appearance since his arrest when he is required to appear before Bow Street magistrates.

Last night Pinochet remained at the Grovelands Priory Hospital in north London, although he is almost certain to be moved within the next few days.

Friends of the general, including Mr Robin Birley, the stepson of the late Sir James Goldsmith, and Taki Theodoracopulus, the Spectator columnist, are reported to be backing a fund to rent a secure retreat for Pinochet and his staff.

The general's bail conditions stipulate that he can only be moved after agreement with the Metropolitan Police Commissioner, lawyers representing the Spanish government and Bow Street Magistrates' Court.