Many thanks for that Yoller. Since I posed the question, I've done some searching, too.
The story actually involves both Birmingham and Birkenhead (where he was arrested), as well as having evidence planted on him (allegedly) and the vaguarities in the police statements, there was also the possibility of a miscarriage of justice.
This led to an appeal being heard in the House of Commons, as reported in Hansard on August 3rd, 1891, some of which is produced below..
On the day that Daly was arrested three parcels were found on his person. Those parcels wore either explosives or intended to be used in connection with explosives. But I want to satisfy the House that these things were "planted" on Daly by a person in the pay of the Irish Police. That person had been a Fenian, and was able to ingratiate himself with Daly and obtain his confidence. That person gave those explosives to Daly with a story which Daly believed, and which induced Daly to take the parcels a certain distance, although absolutely innocent as to their nature. For seven months Daly had been followed day and night by detectives, as many as 14 persons being employed to dog his footsteps, and practically he was never out of their sight. Yet during the whole of those seven months Daly was never seen by the police officers to do anything suspicious. He was arrested on the early morning of April 11, 1884. The police swore that on the Wednesday previous Daly had gone to Wolverhampton. He went from 1145 Wolverhampton to Birkenhead, and thence to Liverpool, where the police lost sight of him. But on Friday morning, at 8 o'clock, when they returned to Birkenhead, the police knew exactly where to lay their hands on him. How did the police know of Daly's movements, and how did they know he would have these explosives upon him, because they had no reason for arresting him unless they found something upon his person on that morning? They were asked how it was they arrested him that morning, when they had had him under observation for seven months, and their answer was that they saw his pockets "bulky." I submit that the evidence shows conclusively that the greatest doubt and suspicion attaches to this part of the case. Daly was undefended at his trial, and I think that was a great misfortune. Had he been defended by an astute lawyer the whole of the case as to the finding of explosives upon him and the action of the police in connection with it would have been torn asunder, and the Judge and jury would not have listened to it. The theory that these explosives were put upon Daly fits exactly into the case as I have laid it before the House. If it stood alone it would be the duty of the Home Secretary to investigate these matters. But it does not rest there, because not long ago a communication was made to the Home Secretary by an Alderman of Birmingham making a revelation of such a character that when I first read it it almost took my breath away. The Chief Constable of Birmingham went to one of the Aldermen of Birmingham—Alderman Manton—and made a statement to the effect that he, the head of the police of Birmingham, could no longer remain silent, but must and would unburden himself of the secret preying upon his mind, and that secret was that he had knowledge that these explosives had been planted upon Daly by an agent of the Irish Police. Here is the letter addressed to the right hon. Gentleman the Home Secretary by Alderman Manton—
§ "Holly Bank, Edgbaston,
§ "October 6th, 1887.
"Honoured Sir,—It is with deep regret that I feel compelled to address you. Three weeks since, at the request of several members of the Watch Committee, Mr. Farndale, Chief of the Birmingham Police, applied to 1146 you asking the favour of an interview, for the purpose of laying before you the circumstances which led to the arrest and conviction of the convicts Daly and Egan. I am informed you have decided that if the additional evidence favourable to Egan can be produced, you will be prepared to give it favourable consideration; but in regard to Daly, nothing will induce you to interfere with the verdict. Sir, I will take the liberty of stating some of the circumstances connected with the arrest, as they were stated to me 12 mouths since, without any preliminary remark. Mr. Farndale spoke as follows: 'Mr. Alderman Manton, you will be surprised when I tell you that the explosives fount on Daly were planted on him by the police.' I said, 'Can it be possible?' Mr. Farndale replied, 'It is really so.' I said, 'Are you absolutely certain?' Mr. Farudale said, 'I am,' adding, 'and I promise you that I will never engage in another such business as long as I live.'
And so the story goes on.
For those still awake who want to read more about this part of it thake a look at
the Hansard article. 
