The judge overseeing US war crimes court at Guantanamo has dismissed the charges against a Saudi prisoner accused of plotting the bombing of the Navy warship USS Cole, the Pentagon said.

The move avoided a showdown between the US military and President Barack Obama. It canceled a hearing that had been set for Monday in the Guantanamo war crimes court, despite the fact Obama had ordered a freeze in proceedings there.

Susan Crawford, the retired judge who oversees the commissions, issued a ruling dismissing without prejudice all charges against Saudi national Abd al-Rahim al-Nashiri, said Pentagon spokesman Navy Commander JD Gordon.

Nashiri is accused of plotting the attack on the Cole that killed 17 US sailors in the Yemeni port of Aden in 2000.

The dismissal of the charges eliminates the need for Monday's hearing but Al-Nashiri would remain in US custody and could be recharged under the commissions system or a replacement drawn up by the Obama administration.

"It was (Crawford's) decision, and it reflects the fact that the president has issued an executive order which mandates that the military commissions be halted, pending the outcome of several comprehensive reviews of our detention operations at Guantanamo," Gordon said.

The White House said Obama would meet on Friday with families who lost loved ones in the Cole bombing and the Sept 11 attacks in order to discuss his plans for the Guantanamo.

The Guantanamo prison for terrorism suspects at the US naval base on Cuba has been widely condemned by rights groups and foreign governments, including close allies of the United States, as failing to meet basic legal standards.

The Bush administration contended the jail was necessary to hold dangerous terrorism suspects and prevent them exploiting legal protection they would enjoy in the United States.

As a presidential candidate, Obama promised to close the prison and one of his first acts in the White House was to sign an executive order to shut it down within a year and halt pending cases.

The freeze is to allow time to decide whether to scrap the special tribunals created by the Bush administration to try suspected terrorists outside the regular US court system.

But the chief judge for the Guantanamo court, Army Colonel James Pohl, said the law underpinning the tribunals gives the presiding judges sole authority to delay cases.

He ruled that postponing Monday's arraignment would harm the public interest in a speedy trial.

Nashiri has been in US custody since 2002 but was only charged late last year. - Reuters