(Adds official account of prisoner's death, paragraph 3)

By Jonathan Wright

CAIRO, Sept 6 (Reuters) - One of the key witnesses and co-defendants in the trial of Egyptian opposition leader Ayman Nour was found hanged in his prison cell in Cairo on Thursday, security sources said.

Ayman Ismail Hassan, who during Nour's trial retracted his testimony against the politician, hanged himself with a sheet in the prison where he was serving a five-year sentence on a charge of forging documents, they added.

The Egyptian state news agency MENA said Hassan made a rope out of a sheet and hanged himself in the early hours while his three cellmates were asleep. They alerted the prison guards when they woke up, it added.

During the trial Hassan said he had made up his testimony against Nour because state security police threatened members of his family.

"I confessed to forgery under pressure from officers from state security," Hassan told reporters on June 30, 2005, after his lawyer told the court he had changed his plea to not guilty.

The court disregarded his retraction and went on to sentence both Nour and Hassan to five years in prison.

Nour, who came a distant second to President Hosni Mubarak in Egypt's first multi-candidate presidential elections in September 2005, says the authorities fabricated the case against him to exclude him from politics.

The charge against Nour was that the endorsements he submitted to the authorities when he set up his liberal Ghad (Tomorrow) Party in 2004 contained forged signatures.

Gameela Ismail, Nour's wife and a party official, said that Hassan, who was in his late 30s, was being held alongside prisoners who had been condemned to death and had complained to his family of mistreatment in prison.

"He kept telling them that he had important information to give to the public prosecutor," she told Reuters.

PARTY VOLUNTEER

Amir Salem, the lawyer who defended Nour in the trial and has been trying to secure his release on health grounds, told Reuters: "He (Hassan) was the only person taken alone and put in the Appeals prison (in central Cairo), and according to his family he complained constantly of ill treatment."

"He was the only person in the Ayman Nour case who insisted on retracting his statements against Ayman Nour, and he admitted twice in front of court that all his statements were contrived," Salem said. "(The judge) refused to pay attention."

Hassan had already served almost two years of his sentence, plus months in pre-trial detention. Prisoners in Egypt typically leave jail after serving two thirds of their time.

Gameela Ismail said Hassan originally came to the party as a volunteer, offering to recruit members. He was a labourer and a bachelor who looked after his sisters and his nieces, she added.

Nour was sentenced on Dec. 24, 2005, and the Egyptian government has rejected repeated U.S. appeals for his release.

In his absence the liberal and secular party he founded has struggled to survive.

Nour, 43, the most influential non-Islamist politician opposed to the Mubarak family, won 8 percent of the vote in the presidential elections of 2005, against 89 percent for Mubarak. Human rights groups say the elections were seriously flawed.

Political analysts said the government wanted him out of the way so that the Mubaraks can prepare for the installation of Mubarak's son Gamal, who is also 43, as the next president. Gamal denies having presidential ambitions.

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