Colin Wallace, who was jailed for 10 years in 1981 for the manslaughter of a friend, had his conviction quashed by the Court of Appeal yesterday.

Mr Wallace, 53, claimed he had been the victim of injustice at his trial and called for a "far-reaching" police investigation into the killing of Jonathan Lewis, a Brighton antiques dealer, found drowned and battered in the River Arun in August 1980. In a reserved judgment, Lord Bingham, the Lord Chief Justice, and two other judges ruled the conviction unsafe and cleared Mr Wallace after new medical evidence led to the case being referred by the Home Secretary, Michael Howard, for review.

Mr Wallace, of Arundel, West Sussex, who spent six years in jail, said afterwards he would be seeking compensation from the Home Office for his wrongful imprisonment. But Ann Curnow, QC, counsel for the Crown, said she would be asking the judges to order a retrial. James Nichol, Mr Wallace's solicitor, said this application would be vigorously resisted.

Mr Wallace, a former Army information officer who now works as a management consultant, said he believed his friend had been killed by criminal members of the Brighton antiques trade and that there was evidence of this.

Lord Bingham, sitting with Mr Justice Owen and Mr Justice Connell, said that, if the case as it now appeared had been put before the court in February 1982 when Mr Wallace's application for leave to appeal against his conviction had been dismissed, he and his fellow judges had no doubt leave would have been granted, the appeal allowed and a new trial ordered.

While the passage of time might influence their judgment now on the practicability or desirability of ordering a retrial, it should not alter their opinion of the safety of the conviction. Lord Bingham said the thrust of the Crown's case at the trial was that Mr Wallace, who had developed an "amorous but not adulterous" relationship with Mr Lewis's wife, had assaulted Mr Lewis at his home and had later that evening taken his unconscious body in his car and had dumped it in the river.

But new medical and other evidence heard by the court about the effect of Mr Lewis's injuries made it unlikely that they had been inflicted in Mr Wallace's house or that Mr Lewis's body had ever been in the boot of his car.

The Crown now accepted that in all probability Mr Lewis was knocked unconscious not in Mr Wallace's home but on the river bank and that evidence at the trial of bloodstains in Mr Wallace's car boot and of his temporary absence during a local dinner when it was claimed he might have disposed of the body were irrelevant.

Lord Bingham said Dr Iain West, a Home Office pathologist, had told the trial jury that Mr Lewis had "probably been hit by a karate blow" with the heel of the hand to the base of the nose while his head was being held in an arm lock. But at the appeal hearing in July this year, two other pathologists said such a powerful blow would have caused damage to nasal bones, bleeding, swelling and bruising. There was no evidence of this.

Although Mr Wallace had served in the SAS, he had denied receiving unarmed combat training. But evidence on the cause of Mr Lewis's fracture, coupled with pictures published in newspapers of Mr Wallace in uniform, could have led to the jury disbelieving his denial, said Lord Bingham.

He added that, despite the radical change in the basis for its case, the Crown still claimed the conviction was safe because of the lies told by Mr Wallace when questioned by the police.

There could be no doubt that Mr Wallace's dishonest and deceptive course of conduct raised a formidable case against him, said Lord Bingham.

But if the conviction was to be upheld on the basis of his dishonesty alone, "we must be able confidently to exclude the reasonable possibility of any innocent explanation for his conduct. We feel unable to do so."

It was possible, even if unlikely, that Mr Wallace initially withheld reference to the evening meeting he had with Mr Lewis shortly before his disappearance and when Mr Wallace's relationship with Mrs Lewis was raised, out of a desire to conceal the subject matter, said Lord Bingham. From that moment onwards, he found himself "drawn into an ever-increasing spiral of deception".

If the trial jury had known that in all probability the assault on Mr Lewis had not taken place at Mr Wallace's house and Mr Lewis had never been in the boot of his car, it is doubtful whether they could have discounted the evidence of a key witness at the trial.

This witness, a riding instructor who worked part-time in her parents' pub, had claimed she had seen Mr Lewis, whom she knew, in the bar with an unidentified man at the time when the prosecution claimed he should have been unconscious and was probably in the car boot.