Abu Qatada was found to have £5,000 cash in his home during a search, and his son had a USB stick containing school work and "jihadist files" including references to al Qaeda, an immigration tribunal has heard.
Robin Tam QC, who represents the Home Office, said the cash was found during the search of Qatada's property, although this was not a breach of bail.
The radical cleric is currently appealing to be let out of Belmarsh prison, where he was jailed in March when his bail request was revoked.
Abu Qatada is fighting to be released from jail
Requesting his release from custody at the Special Immigration Appeals Commission (Siac), Qatada's lawyer Daniel Friedman QC said his client "has been deprived of his liberty more than any other non-convicted person in British history".
Earlier this month, it emerged the controversial preacher is willing to return to the Middle East when a treaty between the UK and Jordan is ratified by both countries.
But Mr Tam told the tribunal on Monday that Siac itself once described Qatada, also known as Omar Othman, as a "truly dangerous individual" and added there was "no reason to believe that's no longer true".
Mr Tam said the family were not taking the bail order seriously and denied that items found in the house were "innocent".
Mr Tam revealed that a USB stick found in Qatada's older son's room contained school work but also "jihadist files" including references to al Qaida.
With regards to the treaty, Mr Tam said the "parliamentary process will be completed within weeks".
Mr Tam said: "At this time, Mr Othman definitively accepts he has lost his fight against deportation."
Earlier Siac heard Qatada was a "proud and dignified man" who has been held in custody for too long.
Mr Friedman said: "He is a proud and dignified man who looks at his fate in religious terms.
"He has been taken from his family on several occasions over the years into high risk security category-A units.
"He has been deprived of his liberty more than any other non-convicted person in British history."
He added: "Against this background, he wants to spend time with his family to prepare to leave the country in a manner that safeguards the dignity and security of all involved."
Qatada allegedly breached bail conditions which prevent him from turning mobile phones and possessing other communication devices at his taxpayer-funded home in London.
Mr Friedman said Qatada accepts that six mobile phones belonging to his wife and his children could have been on but doubts they were on.
He added: "He didn't use them and didn't want to use them."
The Government has been trying to deport Qatada to Jordan, where he was convicted of terror charges in his absence in 1999, for around eight years.