Howard also dismissed the view that the Indian doctor was victimised and claimed that Australia's international reputation has not been harmed by this 'mis-start' to its new anti-terrorism laws.
"Australia will not be apologising to Dr Haneef," Howard told reporters in Sydney. He said, "mistakes happened from time to time and when dealing with terrorism, it was better to be safe than sorry." Immigration Minister Kevin Andrews also said he would not be apologising to Haneef.
"Dr Haneef was not victimised," he said defending Australia's handling of the case before the charges were dropped last Friday for lack of evidence.
The Aussie premier's remarks came hours after Haneef's lawyer Peter Russo said in Bangalore the Australian government owed Haneef an apology and the Indian doctor asserting that he was traumatised and victimised by Australian authorities and the Australian Federal Police.
Howard's rejection of a judicial inquiry on the ground that the case demonstrated the country's legal system worked came following demands by Australian Opposition leader Kevin Rudd and Queensland premier Peter Beattie.
Foreign Minister Alexander Downer said in Sydney it was quite common for suspects to be investigated by police and later released without charge.
"What do you expect them (police and prosecutors) to do -- fall on the ground and grovel? Eat dirt? I mean, get real," the unusually combative minister told reporters.
He (Haneef) is not expecting one (an apology) but I guess if the people who are in line for being sued want to mitigate their losses they might want to think about apologies," Russo told ABC Radio.
Rejecting demands for an inquiry, Howard said, "If we are going to adopt an attitude that says just because a human error has been made, then the whole edifice of our anti-terrorism laws are to be brought under some kind of scrutiny and review, then that would be a huge mistake."
Conceding that the Director of Prosecutions had made mistakes in the case, Howard said he saw no reason why Haneef would be allowed back into Australia.
"I think at the moment, the cancellation of his visa was wholly legitimate and I can't see therefore the circumstances in which it is going to be restored," he said.
Howard said he supported the AFP and Andrews, who revoked Haneef's visa earlier this month, just hours after a Brisbane court had granted him bail.
The premier said his minister was acting on "secret information."
"The question of whether he (Haneef) should have a visa again depends on assessments made as to his associations and I suspend judgment on that," Howard said.
On the apology issue, Andrews, who has drawn fierce criticism for withdrawing Haneef's working visa just hours after he was granted bail, sai "There's nothing to apologise about because in my discretion, looking at the evidence that the Australian Federal Police provided to me, he failed the character grounds."
Andrews is expected to reveal tomorrow the secret dossier on which he based his decision.
Despite the collapse of the case, Andrews has refused to reinstate the visa unless the Indian national's lawyers successfully appeal against the decision in the Federal Court.
Australian Opposition Leader Kevin Rudd while demanding an "independent" judicial inquiry said questions "hanging in the air" about the government's treatment of the Indian doctor can only be answered by such a probe.
Rudd said he did not know what Immigration Minister Kevin Andrews was referring to when the minister cited compelling evidence for cancelling the visa of Haneef.
"We need to have all information on the table," Rudd said adding "I have no confidence in the government conducting its own internal administrative review."
"We need to have that independent judicial inquiry first to establish all the facts that are currently in the private possession of a number of minister" Rudd added.
Rights groups and legal experts say the doctor, who cannot work in Australia without a visa, should be entitled to compensation for his arrest and detention.
"I think he's probably owed a lot of money," the former head of the National Crime Authority, Peter Faris, told the Australian Broadcasting Corporation.
"Certainly he is owed an apology."