The alleged scheme to blow up passenger jets in mid-air was in the late stages of planning and, said the US Homeland Security Secretary Michael Chertoff, was "suggestive of an al-Qa'ida plot".
Mr Chertoff told a press conference in Washington, DC, that the plan had been to detonate liquid explosives on board "multiple commercial aircraft".
The would-be terrorists plotted to carry on the explosive material and detonating devices disguised as drinks, electronic devices and other " common objects".
"This operation is in some respects suggestive of an al Qaida plot," Mr Chertoff said.
"But because the investigation is still under way we cannot yet form a definitive conclusion."
He added: "We were really getting quite close to the execution phase."
Mr Chertoff said the plot was "well advanced".
"They had accumulated and assembled the capabilities that they needed and they were in the final stages of planning for execution," he said.
Attorney General Alberto Gonzales said the operation could potentially have killed "hundreds of innocent people".
He said those arrested overnight were "extremists" who had "gone beyond just stating a desire to kill Americans".
"Their plotting turned to action as they took several steps to carry out their deadly plan," Mr Gonzales said.
US air marshals are being sent to the UK to provide increased security on flights bound for America, Mr Chertoff said.
"While this operation was centred in Great Britain it was sophisticated, it had a lot of members and it was international in scope," Mr Chertoff said.
He added: "This plot appears to have been well planned and well advanced with a significant number of operatives."
He said there was currently no indication of any plotting in the US, but America was taking precautions because it could not assume every alleged member had been rounded up.
The administration has raised the threat level for flights from Britain to "red", designating a severe risk of terrorist attacks, while all other flights were on "orange", one step below the highest level.
The US has banned all liquids and gels from flights, including toothpaste, makeup and suntan lotion.
"We believe that the arrests in Britain have significantly disrupted this major threat, but we cannot assume that the threat has been completely thwarted or that we have fully identified and neutralised every member of this terrorist network," Mr Chertoff said.Reuse content