Is a new terror cell poised to strike in Britain?

Was a chemical bomb factory operating out of the basement of an east London house? Or have the police shot another innocent man?

Until 4am on Friday, it was just another unremarkable red-brick terraced house in a quiet neighbourhood of east London. Only a few residents had noticed the police paying a quiet visit to talk to the occupants of 46 Lansdown Road a few months ago.

A few speculated about the men parked every day at either end of the street, with coffee cups, discarded tabloid papers and mobile phones cluttering their dashboards. "For about three months, one at either end of the road, they have been sitting there from 9am until 6pm in the evening," said one resident, Ashish Khetani, 19. "They were undercover, but we knew they were police because of the phones, cups of tea and papers."

Number 46 had been pinpointed by an intelligence source as the base for a home-grown conspiracy to build a small chemical weapon ­ perhaps to be packed into a handmade explosive vest.

That allegation must have chilled the police and intelligence officers who heard it. London is preparing itself for the first anniversary next month of the most devastating terrorist attack the UK has yet experienced, when 52 commuters were killed by four suicide bombers on 7 July.

It was an attack that MI5 had failed to prevent, even though the suspected chief conspirator, Mohammed Siddique Khan, from West Yorkshire, had been signalled in an earlier Security Service investigation into another terror plot.

The city's vulnerabilities ­ and the terrorists' ability to create terror with simple but volatile homemade bombs ­ was underscored two weeks later when four devices were planted on three Underground trains and a bus. Luckily, they failed to detonate.

But would the next target be another Tube train or perhaps a busy pub crowded with England fans watching a World Cup game ­ this time with a chemical bomb?

At 3.58am on Friday, about 250 police officers, MI5 agents and chemical weapons experts raided the modest family home, and the neighbouring house at No 48, in an operation to expose a suspected bomb factory, allegedly hidden in the basement.

Neighbours heard a loud thud, and shattering glass as the heavily armoured and armed police officers, some in white chemical-weapons suits and masks, battered down the doors of both properties ­ waking up the slumbering occupants.

Events inside the house that morning are now under investigation by the Independent Police Complaints Commission (IPCC), and remain unclear. But it is believed one of the suspects, a 23-year-old postal worker called Mohammed Abdul Kahar, came downstairs to find police surging into the house. In the following struggle, it is thought, he was shot once in the shoulder.

His solicitor, however, last night claimed he posed no threat to the police and was shot without warning.

In a statement, Kate Roxburgh said: "He was woken up about four in the morning by screams from downstairs, got out of bed in his pyjamas obviously unarmed, nothing in his hands and hurrying down the stairs.

"As he came toward a bend in the stairway, not knowing what was going on downstairs, the police turned the bend up towards him and shot him ­ and that was without any warning.

"He wasn't asked to freeze, given any warning and didn't know the people in his house were police officers. He is lucky still to be alive."

Mr Kahar's brother, Abul Koyair, was arrested at the same time, and his solicitor, Julian Young, has also claimed his client is innocent. He said: "My client denies any involvement in the commission, preparation, or instigation of terrorist offences and has maintained that position from the start."

Witnesses yesterday reported seeing Mr Kahar being carried out of the house by a police officer, in a bloodied T-shirt and boxer shorts. "He seemed dizzy, but they gave him some gas and he went to sleep," said Nimesh Patel, 14.

It was a very quietly staged operation, said one neighbour, Putnu Patel, a student. "I looked through my window and I saw the police vehicles. They were coming very quietly. The officers were wearing what looked like plastic bags on their feet, and some had masks. I thought I was dreaming."

Mr Khetani, a security engineer, said he saw the first armed police officers enter the house. "We heard them smash the window. My parents called me and we went to the front room to see what was happening.

"I could see a window was smashed and two men in black with guns jumped through the window and opened the front door from inside to let the others in."

By then, the street was chaotic. Neighbours had been roused from sleep by the noise of the raid and the clatter of a police helicopter overhead.

Initial fears that the house was a bomb factory were being investigated yesterday. Although the building and pavement were quickly shrouded in scaffolding and white sheeting as the painstaking forensic search of every room began, none of the neighbouring houses was evacuated and surrounding streets were reopened. Last night, however, Scotland Yard was refusing to say if any substances had been found.

This diverse but impoverished area of London, home to a rich mix of Bengali, Pakistani and Indian immigrants, has been under intense MI5 scrutiny for months. Intelligence reports have been circulating in Whitehall which warn of east London Islamist terror cells intent on carrying out a so-called "spectacular".

The suspected network was mentioned in the on-going trial of seven men accused of planning to build a "fertiliser bomb" to attack targets such as Bluewater shopping centre in Kent and the Ministry of Sound nightclub in central London.

Mohammed Babar, 31, a senior al-Qa'ida activist turned supergrass after being jailed in the United States, alleged there was an "east London network" linked to other terror suspects, one of a number of other "jihadi" networks around the country.

Armed with that intelligence, and very detailed allegations from other cases, the police and MI5 were on high alert for a potential attack hatched and even launched from the area.

Yet senior Metropolitan Police officers were cautious about the guilt or innocence of the men arrested on Friday. Deputy Assistant Commissioner Peter Clarke, the Met's head of anti-terrorism, made it clear they were acting, in effect, as a precautionary measure.

The police, he said, had been given "very specific" allegations. "The intelligence was such that it demanded an intensive investigation and response. The purpose of the investigation, after ensuring public safety, is to prove or disprove the intelligence that we have received. This is always difficult, and sometimes the only way to do so is to mount an operation such as that which we carried out."

The police also raided the next-door property, fearing a link to No 46 because both homes were owned by the two suspects' father, Abul Kalam. One man suffered head injuries during the raid, sparking allegations from community activists about heavy-handed behaviour by the police.

The South Asian family living there were furious yesterday about being arrested as suspected terrorists. "We would like to express our deep shock and anger at the operation that took place," a family member said.

"I received serious head injuries that required hospital treatment. We were detained without arrest for 12 hours. We are currently liaising with our legal team on the course of action to take."

Yesterday, forensics officers in black boilersuits, some carrying cameras, yellow floodlight stands and large canvas bags, could be seen entering and leaving the raided Victorian house, signing themselves in and out in a logbook.

Mr Kahar was last night recovering from his wound in the Royal London Hospital in east London, guarded by armed officers and under arrest, while his brother was being held in the high-security Paddington Green police station.

The Kit: How police are protected

Many officers in the raids were equipped against the threat of chemical or biological agents

THE GAS MASK The inner mask can be worn continuously for up to five days

THE UTILITY BELT Pouches also carry a face mask and rubber gloves with extra grip

THE SUIT Also protects against nuclear fallout

THE BOOTS Plastic overboots protect against chemical agents

THE LEGAL RESPONSE

1,000 ARRESTS made under the Terrorism Act 2000 since the attacks in the US on 11 September, 2001

121 INDIVIDUALS charged under the Act during that time

138 PEOPLE charged under other legislation since the terror attacks on the World Trade Center and the Pentagon

23 CONVICTIONS for terrorist offences during that same timespan

7 YEARS' jail, the sentence given to radical Muslim preacher Abu Hamza for soliciting murder and preaching racial hatred at Finsbury Park Mosque, north London

14 MAXIMUM number of days that terror suspects can be held without charge under legislation brought in in 2003

52 INNOCENT PEOPLE killed by the 7/7 attacks on London's Tube and bus network last year.

A further 700 people were injured in the four bomb blasts