MI5 will come under intense public scrutiny in the New Year when the 7/7 inquest examines whether the spy agency could have prevented the atrocities.
The Security Service, as MI5 is officially known, faces a series of difficult questions about why it failed to investigate the terrorists who carried out the 2005 London bombings when they came to its attention 17 months before the attacks.
Many relatives of those killed argue that intelligence officials should have followed up ringleader Mohammed Sidique Khan and his number two, Shehzad Tanweer, after they were seen meeting known terror suspects in 2004.
MI5 says it was swamped with potential leads at the time and did not have enough information to prioritise Khan and Tanweer over other suspects.
The intelligence agency also argues that pursuing these questions could undermine national security – and even help terrorists plotting other attacks.
Graham Foulkes, whose 22-year-old son David was killed by Khan in the Edgware Road bombing, predicted that MI5 would be exposed at the inquest as a “pretty inefficient service”.
“This is very important on a number of levels – personally for me, because as a father I need to know what happened and how this was allowed to happen,” he said.
“But also we as a country need to know what happened because we need to learn lessons. We have to have confidence in those who are charged with protecting us.”
Mr Foulkes, from Oldham, accused the Security Service of using national security concerns as an excuse to avoid embarrassing scrutiny.
“My level of confidence that MI5 will be truthful, decent and honest is not very high. They have shown themselves to be capable of anything.
“I think what we see will quite frighten us because we will see slack, loose policies and procedures – I think that will scare people.
“I suspect we will learn that their collation of information is so poor that that is how Khan escaped.
“Because there are so many different people involved in counter-terrorism, we will see that the sharing of information is poor.
“I would say that what we must have is a single agency responsible for counter-terrorism rather than multiple agencies. We’ve seen that multiple agencies do not work.”
Home Secretary Theresa May failed in a legal bid to have top secret evidence heard in closed sessions excluding the bereaved families.
Her legal team argued that the coroner, Lady Justice Hallett, would not be able to reach accurate conclusions about MI5’s involvement in tracking the 7/7 bombers without seeing the classified material, which cannot be revealed in open hearings.
The coroner said the sensitive files could be edited to remove names of sources and other confidential information, and stressed: “I do not intend to endanger the lives of anyone. I do not intend to allow questions which might do so.”
The government could still employ rarely-used powers to transform part of the inquest into a public inquiry, which could examine the secret documents in closed hearings.
But Lady Justice Hallett warned that adopting this route could lead to lengthy delays and extra heartache for the bereaved families and survivors of the attacks.
It is understood ministers have made no decision on whether to use the powers, but MI5 appears to have little appetite for the move.
A Home Office spokesman said: “The government has made clear that it welcomes the coroner’s inquests and has said that the Security Service will co-operate as far as possible.
“This does not mean, though, that we will put lives at risk and undermine our national security by not protecting sensitive material.
“Along with many victims’ families, we believe a closed hearing for a small part of the July 7 inquests would be the best way for the coroner to consider as much information as possible. The court has decided this is not possible and we are not appealing this.
“It is clear to us from her judgment of November 3 that Lady Justice Hallett wants to protect national security and we will now work with her to take this forward and seek to explore a range of options to this effect.”