(Adds U.S. reaction in 9th paragraph)

By Peter Graff

LONDON, Nov 15 (Reuters) - A British court ruled Thursday that radical Muslim cleric Abu Hamza al-Masri could be extradited to the United States to face terrorism charges including trying to set up an al Qaeda training camp in Oregon.

Egyptian-born Hamza, 49, serving a seven-year jail term in Britain for inciting his followers to murder nonbelievers, is wanted by U.S. authorities on 11 charges.

The U.S. indictment accuses Hamza -- who had a hook in place of a missing hand -- of attempting to set up a terrorist training camp in Bly, Oregon, from 1999 to early 2000, and also providing support to al Qaeda and the Taliban.

Hamza, who applauded the Sept. 11 attacks on New York and Washington in 2001, also faces charges that he was involved in plotting the seizure of 16 Western hostages in Yemen in 1998.

Four of the hostages, three Britons and an Australian, were killed when Yemeni troops stormed the militants' hide-out.

Hamza was quizzed at the time by British police but was not charged and Washington said it had since obtained new evidence -- an interview the cleric had given to one of the hostages who survived.

If convicted, he faces a maximum sentence of up to 100 years in prison.

London's City of Westminster Magistrates' Court approved the extradition but the decision now has to be ratified by the British home secretary (interior minister).

"We continue to watch these ongoing legal proceedings carefully with respect to his (Hamza's) extradition request and are hopeful that ultimately he will be able to stand trial in New York," U.S. Justice Department spokesman Dean Boyd said in Washington.

Under new extradition laws brought in this year, suspects can be extradited from Britain to the United States while they are serving a jail term.

However, in a rare British rebuke of the U.S. penal system, Judge Timothy Workman criticised the solitary confinement regime at top U.S. security prisons and said its use could be enough to block an extradition on human rights grounds.

"In my view if such a regime were to be applied for a lengthy, indefinite period it could properly amount to inhuman and degrading treatment which would violate article 3 (of the European Convention on Human Rights)," Workman said.

Hamza, a former nightclub bouncer, was jailed by a London court in February 2006 over sermons which prosecutors said repeatedly advocated the killing of Jews and other non-Muslims.

Although he was never linked to any specific plot, police said his Finsbury Park Mosque had acted as a base for militants.

A number of Islamists jailed for plotting attacks in Britain in recent years worshiped there, and the mosque had attracted the likes of convicted "shoebomber" Richard Reid and jailed Sept. 11 conspirator Zacarias Moussaoui.

Hamza, who has one eye and wore the hook in place of two hands he lost in Afghanistan, had long been a hate figure for the British tabloid press, a sentiment that grew in intensity after the London bombings in July 2005.

However after his conviction, his British lawyer said Hamza felt he was a "prisoner of faith." His lawyers said they would fight the extradition request on human rights grounds and argued he should be tried in Britain over the Yemen charges. (Writing by Michael Holden)

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