A neighbour of three men arrested in Cardiff said that, after they were convicted of theft and drugs offences, they "went to prison as petty criminals and came out expressing extreme views". Twelve men, mainly British nationals of Bangladeshi origin, were still being questioned by anti-terrorism officers last night following co-ordinated raids in the Welsh capital, London, Stoke-on-Trent and Birmingham on Monday.
Sources said the gang was planning a "spectacular" attack on banks, shops and "iconic" sites in London.
Lord Carlile, the Government's counter-terrorism watchdog, told MPs yesterday that there were allegations of a "significant" terrorist plot. Giving evidence to the Commons home affairs select committee, he said: "The gestation period for the arrests has been long. I was aware of an operation some time ago which led to these arrests. On one occasion I was able to observe, literally observe, some of it occurring. I believe that it is very possible that people may well be charged and prosecuted."
The alleged cell was said to have been linked to the banned extremist group al-Muhajiroun and its offshoot Islam4UK, as well as Anwar al-Awlaki, the radical al-Qaeda preacher based in Yemen.
The neighbour of the three Cardiff men said he believed a "radical preacher" had "politicised" them in prison.
He claimed they had grown long beards while in jail and later handed out leaflets at the Jalalia mosque encouraging people not to vote in this year's general election, saying it was "unmuslim".
Muslim leaders said they had tipped off police about a group of extremists in the Welsh capital, where a total of five men, aged 23 to 28, were arrested.
They said they had stopped the group from holding meetings in mosques and informed police, but it was thought that MI5 was already aware of them. The group of about 15 to 20 young men was understood to have held a meeting at a community centre in Cardiff less than two weeks ago, addressed by Abu Izzadeen, a radical preacher recently released from jail.
Counter-terrorism officers were understood to have been aware of the event at the Cathays Community Centre attended by up to 30 people. The group has held events under the banner Islam4UK and Islamic Pathways among others.
Saleem Kidwai, the secretary general of the Muslim Council for Wales, said: "The Muslim community is aware that there is a small group of people who have links to extremists and they have been brought to the attention of police.
"This is no shock, the shock will be when the details are released of what they were planning to do.
"There was a group of 15 boys that the community was aware of, they were going to have a meeting and they were rejected by all the mosques."
