Is this the first evidence of a suicide bomb plot in Britain?

IOS investigation: Anti-terrorist police dismissed speculation that the man arrested in Gloucester last week was preparing to target a football match. But intelligence services believe he was a potential suicide bomber. Andrew Johnson, Severin Carrell and Jan McGirk follow a trail from Gloucester to an al-Qa'ida training camp near Kabul and investigate links between Sajid Badat and Richard Reid, the British 'shoe-bomber'

They called Sajid Badat the "walking angel". Those in the close-knit Muslim community of Gloucester who knew the 24-year-old said he was a devout adherent of his religion who had excelled at school, and was training to be an imam at the College of Islamic Knowledge in Blackburn, Lancashire. A Liverpool supporter, he played Sunday football.

But ever since he returned to Britain a year ago after spending half a decade travelling in Pakistan, Afghanistan, India and Saudi Arabia, Special Branch officers were following his every move.

It is believed he had spent time at al-Qa'ida's Khaled training camp south of Kabul, where the "shoe bomber" Richard Reid was trained. According to security experts, the camp was where suicide bombers who would be deployed in Europe were sent. That connection with Reid, and the "relatively small amount" of explosives found at his home, stoked last week's speculation that Badat had been planning a suicide attack at a football ground, or was making a shoe bomb.

Both theories were dismissed by police, but intelligence sources said they believed he was a potential suicide bomber. The operation was the result of months of work following the arrest of Reid, serving a life sentence for trying to blow up an American Airlines flight from Paris to Miami in December 2001.

The police pounced on Mr Badat at 7am on Thursday. More than 100 neighbouring houses had been evacuated before officers cordoned off his street and anti-terrorist police raided his home. Bomb experts used sniffer dogs, and three other homes were searched, although "nothing significant" was found. The neighbours were allowed back home on Friday, but forensic examination of Mr Badat's home continued yesterday.

Six addresses in Birmingham were also being searched, although a 33-year-old man arrested there on Thursday was later released without charge.

Coming a week after Britons were killed in al-Qa'ida-linked bombings in Istanbul, followed by arrests in Turkey, Italy and Germany, the Gloucester swoop brought the war on terror into the heart of England. Yesterday the British embassy in Riyadh warned that "terrorists may be in the final phases of planning attacks" in Saudi Arabia, but the threat no longer seems confined to the Middle East, the Third World or even the large conurbations of Manchester and London.

"To say we are shocked would be an understatement," said Mahmood Moolla, the founder and first secretary of the Gloucestershire Islamic Trust. "We never expected any such thing to happen in this peaceful community. This has always been a trouble-free place."

Britain's state of terrorist alert was recently increased from "significant" to "severe general" following new intelligence of an al-Qa'ida plot. The threat level is the second highest under a new system introduced after the Bali bombing in October last year.

And Tony Blair has given Britain's security and intelligence agencies an extra £50m in emergency funding - chiefly to recruit spies. Nearly £40m will be spent by MI5, MI6 and the GCHQ eavesdropping station on anti-terrorism operations and recruiting agents in Iraq and extreme groups linked to al-Qa'ida. The extra funds, disclosed by the Prime Minister in a written answer in the Commons last week, take the total budget for Britain's security and intelligence services to just over £2.06bn this year - its highest ever level.

Mr Badat's story echoes those of the Britons now held at Camp Delta in Guantanamo Bay in Cuba. Shafiq Rasul, 24, and his friend Asif Iqbal, 20, from Tipton near Birmingham, had been described as "Westernised" and "nice" until they apparently joined a radical Muslim group in the town, disowned by the area's moderate Muslim leaders. The two, suspected of belonging to al-Qa'ida, were captured in Afghanistan by American forces in January 2002. Intelligence sources say Mr Badat's "profile" is similar to that of the British suicide bombers in Israel - well-educated British-born Asians. Asif Hanif, 21, from Hounslow, bombed Mike's Place, a popular Tel Aviv bar, in April, killing three people.

The body of his accomplice, Omar Khan Sharif, 27, from Derby, was later washed up on the shore of Tel Aviv after his bombs failed to detonate.

Some reports have linked Mr Badat to the banned Islamic militant group Jamat al-Furqan. Its leader, Abdul Jabbar, is suspected of involvement in the murder of the American journalist Daniel Pearl, and is said to be behind attacks on Christian targets in Karachi.

Mr Badat went on a gap year after gaining four A-levels at the Crypt Grammar School in Gloucester. But he didn't return for five years, only sporadically calling home. When he finally returned, he enrolled at the Islamic college in Blackburn, where he shared a dormitory with five others, but recently he had dropped out.

The arrest of Mr Badat brought the number held in Britain under anti-terrorism laws since September 2001 to 481, of whom only 73 have been charged; most of the others have been released. Terror experts say this indicates the security services are casting their net too wide. Dr Bill Durodie, a senior research fellow at the Centre for Defence Studies at King's College, London said: "There is a danger that in chasing up every little piece of information, the big thing under our noses will be missed."

Dr Durodie is among experts who believe levels of anxiety over terrorism in Britain do not match the risk. They describe the reaction to Mr Badat's arrest, especially by the Home Secretary, David Blunkett, as alarmist, and put the risk of being injured or killed by terrorism as "minuscule".

"I'm not saying an attack will not happen, but we are doing al-Qa'ida's job for them," said Dr Durodie. "I do think the risk is very low. The elite of al-Qa'ida has gone, ... . Those underneath are not organised enough to pull off anything on the scale of 11 September.

"While we've been worrying about weapons of mass destruction, their actions tell us that what they have are surface-to-air missiles and car bombs. There hasn't been an attack in western Europe. The pattern, apart from 11 September, is that attacks have been restricted to the Middle East, South-east Asia and Pakistan.

"By highlighting how vulnerable we are, we are encouraging lonely cranks and all types of people to have a pop, because they can make the news. Richard Reid, the shoe bomber, wasn't a high flyer in the world of terror."

Dr Durodie, who is halfway through a two-year research programme called the Domestic Management of Terrorist Attacks, accused politicians of being alarmist. "When we see the Home Secretary saying 'this individual poses a threat to the life and liberty of this country' - when does one individual threaten 60 million people? It's ludicrous.

"I don't think that whatever amount of explosives that person [in Gloucester] may have had, is a threat to the UK that is alarmist. Since when does one raid need the evacuation of 100 houses? I think somehow the operation got turned into a public relations exercise, and that endangers the counter-terrorism effort in the UK. The most important thing is to deal with the exaggerated perception of terrorism. It really is destructive."

Dr Durodie's views were supported by Dr Magnus Ranstorp, director of the Centre for the Study of Terrorism and Political Violence at St Andrew's University. He said anxiety levels were so high that terrorists did not have to achieve a great deal to have a large impact.

"The state of alert is realistic," he said. "And we have been extraordinarily successful in reacting pre-emptively. But talking about the terrorist threat itself may create a disproportionate sense of vulnerability. The chance of being caught up in a terrorist event is minuscule compared to the chances of being run over by a car.

"But psychologically, if something did occur here, it would cause maximum social disruption. Killing even a small number of individuals in a spectacular way, such as a suicide bomb, would have a huge impact on our society, on tourism and business, and we would have to spend an enormous amount on security measures.

"With the IRA there was predictability... . Now there is a great deal of uncertainty. The enemy is invisible and adopting measures ... contrary to our value system. That may have a much more profound effect."