Mr Nashar says he was on holiday in Egypt when he was arrested
An interior ministry report "made clear there was no link between Magdi al-Nashar and al-Qaeda or the bombings", a government spokesman said.
British police have not formally named Mr Nashar as a suspect in their investigation.
The 33-year-old, who was arrested last week, has denied having any role in the attacks that left 56 people dead.
On Saturday, the Egyptian interior minister said that reports linking Mr -Nashar to al-Qaeda were "groundless" and based on a hasty conclusion.
In custody
Mr Nashar, who completed a PhD in chemistry at Leeds University, was arrested in Cairo as part of the inquiry into the 7 July bombings.
He is reported to have admitted knowing one of the bombers, Hasib Hussain, and helping to arrange the rental of a flat in which traces of explosives were found.
Mr Nashar told Egyptian investigators that he had intended to return to Leeds at the end of a holiday in Egypt, which began a week before the bombings.
The Egyptian chemist arrested in Cairo last week has no links with the London bombings, officials have said. The Egyptian interior ministry published a report which "made clear there was no link between Magdi Asdi el-Nashar and Al Qaeda or the bombings". Mr Nashar has still not been named a suspect by British police. 

Just after his arrest, the Egyptian interior minister said that reports linking Mr Nashar to al-Qaeda were "groundless" and based on a hasty conclusion. Mr Nashar has always denied being part of the London bombings; however he is reported to have told investigators that he helped arrange the rental of a flat for one of the bombers, Hasib Hussain. 

Mr Nashar has always maintained that he had intended to return to Leeds at the end of a holiday in Egypt, which began a week before the bombings.