Qatada said he wants the payout for his "extended mistreatment" while locked up for seven years at the high-security Belmarsh jail without trial, the Daily Mail reported Sunday.
"He has done nothing against the British people but the British authorities put him jail for many years," his brother, Ibrahim Othman, said.
"He has not had any trial in Britain. It is only right that he should have the money. He hasn't been able to work for a long time because he has been in jail, so how could he survive without compensation when it is all over?"
Qatada was released from prison Tuesday and moved into his $633,000 home in Wembley, North London. He is subject to a 16-hour-a-day curfew, and the government is spending $7.9 million a year monitoring him by GPS and constant police surveillance.
British authorities have placed strict restrictions on whom he can meet and will track his movements electronically.
Britain's Special Immigration Appeals Commission Monday agreed with Qatada's request that he not be deported to his home country of Jordan for trial on terror charges because evidence obtained by torture might be used by prosecutors.
Videotapes of Qatada's sermons influenced Mohamed Atta, one of the ringleaders of the Sept. 11, 2001, terror attacks in the United States, the Home Office says.