The telephone number of the suspect, Haroon Rashid Aswat, 30, was said to have been found in the mobile phone of the bomber Mohammad Sidique Khan. Like Khan, Mr Aswat was born and lived in Dewsbury, West Yorkshire.
The man is understood to have been detained in Lahore as part of a clampdown on 200 banned militants and religious extremists. Scotland Yard said it was liaising with Pakistani authorities.
Mr Aswat was born in Dewsbury on 22 September 1974 and has eight brothers and sisters aged from 15 to 32. His siblings and parents still live in Dewsbury and Batley.
There remains, however, considerable confusion about his arrest, with one Pakistani minister denying that a man of that name was being held. However, Pakistani security sources have insisted he was arrested in the town of Sarghoda, which is 90 miles south of Islamabad.
An intelligence source claimed he was carrying a suicide bomb belt packed with explosives, about one million rupees (£10,000) in cash and a British passport.
British police and security agencies are understood to have been informed about the arrest and want to interview Mr Aswat. At least three of the British-born London suicide bombers are known to have travelled to Pakistan last year in two separate groups and there is growing evidence they became radicalised while staying there. Khan, 30, who set off the bomb at Edgware Road station, killing six other passengers, is thought to have been the senior member of the unit. British investigators have discovered that Khan had an extensive series of contacts with Islamic extremists. A security official said that it had not yet been "definitively concluded" that the telephone number found in Khan's mobile telephone was that of Mr Aswat, but that the evidence was "pointing in that direction".
Mr Aswat's family said that he had moved from West Yorkshire about 10 years ago.
At a house in Warwick Road, Batley, where Mr Aswat's parents are believed to live, a man, who said he was a brother of Mr Aswat, said: "We've not seen him for 10 years. He went away to have a chance of a better job and better standard of living. In the early days of going he made the odd phone call. From what I can conclude maybe he didn't want us to know what he was doing."
The man, who would not give his name, said the family had yet to be told anything officially about the arrest. "The only thing we can do is to ask him to contact us."
Mr Aswat's parents are Rashid and Sarah. Rashid Aswat runs a bathroom business, but is semi-retired. The Muslim family have moved to the terraced house from Gujarat in India.
It appears that there is a connection between British and Pakistani Islamic militants. The kidnapper of the American reporter Daniel Pearl in Karachi, Omar Saeed Sheikh, is a British Muslim of Pakistani origin, and there are reports that Sheikh has been questioned about the London bombs.
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