Ahmed Abdulla Ali walked into Bairstow Eves estate agent in Walthamstow on July 20, 2006 and collected the keys to his new flat.

It had been a good piece of business for the agency: a buyer moving from viewing to completion in a matter of weeks and paying £138,000 cash.

Ali explained the urgency - he was splitting up with his wife. It was a lie. Ali had just returned from Pakistan with orders from al-Qaeda to step up preparations for a wave of terrorist attacks in Britain. The flat at 386a Forest Road was to be a bomb factory, where Ali would put together devices he had been taught to make by an al-Qaeda explosives expert.

What Ali and the men around him did not know was that they were under round-the-clock surveillance by MI5 and SO15, Scotland Yard’s counter-terrorism unit.

They were followed wherever they went; every item they bought was logged; the rubbish they threw in park bins was recovered and everyone they met was filmed or photographed. Flat 386a was routinely “burgled” by surveillance teams who planted covert video and audio recording equipment.

Ali had been a target for the security agencies since 2005 because of his links to extremists in East London, including Muktar Said Ibrahim, the leader of the July 21 bomb gang.

Since his teens Ali had been involved with Tablighi Jamaat, a strict religious movement viewed with suspicion by intelligence agencies. He also travelled frequently to Pakistan, staying for long periods between 2003-06.

The MI5 assessment in early 2006 was that Ali was probably a fundraiser. But there were deeper concerns.

One of his visits coincided with trips by the 7/7 and 21/7 bombers and a gathering in Waziristan at which the al-Qaeda leadership brought together a group of young British jihadis and turned them into suicide bombers.

The intelligence agencies took note when he returned from a visit to Pakistan in 2006 and there were dramatic changes in his behaviour - talk of leaving his wife and the sudden purchase of a flat.

Ali was seen shopping for clamps, drills, syringes, glue and latex gloves. Inside 386a officers found batteries, filaments, plastic bottles and large amounts of Tang, a high-sugar drink powder. They also witnessed bomb-making experiments using liquid explosives in soft drink bottles. The stepping up of Ali’s activity coincided, the prosecution claimed, with the arrival in Britain of Mohammed Gulzar, a Birmingham man who fled to Pakistan in 2002 after he was allegedly involved in a non-terrorist-related offence.

Mr Gulzar had left Britain at the same time as his friend Rashid Rauf, who also went to Pakistan. Security officials say that Rauf became a key conduit between British radicals and militant groups linked to al-Qaeda.

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