Mr Osman, a British naturalised citizen who came from Somalia when he was 14, was found in an apartment on the outskirts of the city, in Tor Pignattara, a vast rundown suburb to the east of Rome.
Italian security sources quoted by Italian news channels and agencies, said Mr Osman was traced to Rome after British authorities gave Italian police the mobile phone number of a relative, understood to be his brother, who ran an internet centre near Rome's main railway station, at the Termini in the centre of the city. Police sources said his brother was also arrested and owned the flat where Mr Osman was found. An official said he was brought alone and covered by a blanket to police headquarters
Police hastened to reassure people that Mr Osman "had not come to prepare an attack", the Italian news agency ANSA reported. Mr Osman had been followed since leaving Britain for Italy via Paris and his whereabouts were pinpointed when he made telephone calls within Italy and to France, police sources said.
Cellular phones tied to a regular account are easier to trace than calls made from cell phones using anonymous prepaid cards.
The successful operation, coordinated by the anti-terrorist DIGOS force, Italy's equivalent of the Special Branch, was welcome news for the government of the Italian Prime Minister, Silvio Berlusconi.
Ministers have been trying to calm growing public unease that Italy, because of its deployment of troops in Iraq, is likely to be the next target of al-Qa'ida.
"This is the result of great collaboration between Rome and London, which has served to attain an enormous objective," said Achille Serra, the prefect of Rome, who is responsible for loaw and order in the Eternal City.
But he added that the arrest "is certainly positive but leaves no room for triumphalism" and investigators needed to determine exactly "why the arrested man chose Rome as a support base." Police from Brescia and Milan also helped track Mr Osman. Some reports said the apartment where he was found also was a telephone call centre for immigrants in Rome.
The Italian Interior Minister, Giuseppe Pisanu told Sky News: "There has been a lot of co-operation between the security services in London and Rome after the terrorist bombs."