For two years, the investigation into the disappearance of Madeleine McCann has charted an erratic course from Leicestershire to Morocco in its efforts to trace her whereabouts. Yesterday, its focus moved to a German hospital where a convicted British paedophile is being treated for throat cancer.

Raymond Hewlett, 64, who is wanted in connection with at least two sexual assaults in England and Ireland, emerged as the latest "individual of interest" to private investigators hired by Kate and Gerry McCann after it was revealed he was living with his family an hour's drive from Praia da Luz, the Portuguese resort where the three-year-old disappeared on 3 May 2007.

The former Scots Guard, who has convictions for the abduction and indecent assault, including attempted rape, of girls in Britain dating back to 1972, did not feature on a list of paedophiles with links to Portugal drawn up in the aftermath of the disappearance.

The Briton, described by detectives as "cunning" and a "danger to children" was questioned during the initial inquiry but discounted after providing an alibi.

Two British investigators leading the McCanns' investigation are in Germany to speak to Hewlett amid suggestions from two police forces that he could be extradited to Britain to be questioned about unconnected sex attacks.

The twist comes shortly after the second anniversary of Madeleine's disappearance and her family's subsequent "awareness campaign", funded by donors and £1m in libel payments received by the McCanns and their friends, to try to ensure her case is not forgotten.

The McCanns marked the occasion with a series of media interviews and by issuing a computer-generated image of how their daughter would now look, aged six, in an attempt to gain new leads.

Yesterday, the gaunt features of Hewlett, propped up in a hospital bed, propelled the case back into the headlines.

Hewlett, who was travelling Europe and North Africa in a motorhome with his German wife and six children in 2007, was pictured on the front page of the Daily Mirror with his assertion that he was innocent of any involvement in Madeleine's disappearance.

Pictures of the long-haired Hewlett, who has variously worked on fishing trawlers and as a fairground operator, were printed next to artist's impressions of a long-haired man spotted outside the McCann's apartment .

Clarence Mitchell, the former BBC journalist who is the family's spokesman, was careful to manage expectations, confirming only that Hewlett was of "operational" interest to its investigation headed by former Detective Inspector Dave Edgar and former Detective Sergeant Arthur Cowley.

The officers, who have experience in "cold case" reviews, were hired by the Find Madeleine Fund to re-examine leads from the initial investigation.

Mr Mitchell said: "This is one line of inquiry ... Kate and Gerry are fully aware of the development and have been for a little while."

It is understood new information on Hewlett, originally from Blackpool, Lancashire, emerged after the latest media appeal by Madeleine's parents.

The Daily Mirror said attention was drawn to the Briton by a couple who met him while in Portugal, where he had been selling second-hand goods while touring camp sites and towns.

Hewlett insisted he was 30 miles from Praia da Luz at the time of the abduction, telling the newspaper: "I know exactly where I was. I wasn't anywhere near there [Praia da Luz]. I've done nothing wrong, nothing, nothing. " Hewlett is understood to have drifted around Europe, avoiding outstanding arrest warrants, after a string of convictions in Britain, including the abduction and sexual assault of a neighbour's daughter in 1972 and an attack in 1978 when he put a gun to the head of a 14-year-old girl during an attempted rape.

A spokeswoman for West Yorkshire Police said: "We are seeking him in connection with an indecent assault in 1975."

n The disgraced former Portuguese police chief who previously led the inquiry into Madeleine McCann's disappearance has been convicted of perjury.

Goncalo Amaral was given an 18-month suspended sentence by a court in Faro, Portugal. He was one of five officers charged over an alleged attack on the mother of another missing girl. Amaral was convicted of falsifying documents, the Correio da manha reported.

The McCanns are taking legal action for defamation over Amaral's "entirely unfounded claims" in the media, which included the allegation that Madeleine was dead and that her parents were involved in concealing her body.

Old habits: Retired police on the case

*After a long career pursuing villains in the name of the law and public service, many might expect Britain's police officers to spend their retirement as far away as possible from the dogged pursuit of wrongdoing.

Increasingly, that is far from the case. Rather than reaching for a set of golf clubs, newly-retired detectives and their uniformed counterparts are entering the nebulous and lucrative world of private investigation to deploy their skills tracking down debtors, countering industrial espionage and accepting cases that have baffled regular law enforcement bodies.

The latter scenario is the one that currently confronts the Alpha Investigations Group, the company headed by former detectives Dave Edgar, 52, and Arthur Cowley, 57, pictured right, which has been employed since last year by the Find Madeleine Fund. The two men, who between have more than 60 years experience in the Royal Ulster Constabulary and Merseyside Police respectively, are part of a growing body of professional police officers whose skills are in demand in the private sector for work that ranges from threats to the security of large corporations to pursuing missing funds through tax havens.

The Association of British Investigators (ABI), which represents about 500 companies, estimates that 70 per cent of employees in the industry are former police officers with the remainder recruited from the legal or technology sectors.

Peter Heims, a veteran investigator with more than 50 years experience, said: "It is a natural progression for a lot of police officers. You do 20 or 25 years service and come out of the force with time and a desire for a second career. The skills you acquire as a detective or a uniformed officer are more and more in demand."

According to ABI estimates, there are about 10,000 private eyes in Britain with the £1.5bn industry growing at about five per cent a year. In the meantime, it seems customers such as Kate and Gerry McCann are reassured by the no-nonsense approach of the likes of Mr Edgar and Mr Cowley. Speaking earlier this month, Mr Edgar, a former detective inspector, said: "You don't start an investigation in Morocco or Spain or France or even Lisbon. This offence happened in Praia da Luz. That is where I think the answer is."