A radical cleric with links to Abu Hamza al-Masri, the former imam jailed for inciting murder, is among 14 men held over a suspected attempt to recruit a cell of British suicide bombers.
The cleric, Abu Abdullah, was arrested along with his brother, Musa Akmet, in weekend raids that started at a Chinese restaurant in Borough, south London.
The 14 suspects could become the first in Britain to be charged with encouraging terrorism and giving or receiving terrorist training.
Under the Terrorism Act 2006, police now have new powers to crack down on the process to recruit and brainwash terrorists - even before they plan an attack.
Searches are underway at both of the brothers' homes in south-east London.
Mr Abdullah, 42, is a close associate of Hamza, the hook-handed former imam of Finsbury Park Mosque who is currently serving seven years in Belmarsh Prison.
On Friday night he was arrested at the Bridge to China restaurant, a halal eatery in Borough where suspected ringleaders and recruits had met for dinner.
His brother, Mr Akmet, was arrested in the early hours of Saturday morning at his three-bedroom semi-detached house in Prince John Road, Eltham.
Mr Abdullah frequently visited his brother, one of Mr Akmet's neighbours said. "I did some plastering work at Musa's house and his brother was there.
"He was preaching to me, saying I should embrace Allah and he would change my life for the better and could do wonderful things for me.
"He was going on at me constantly about it but in the end I said to him, 'Look, I'm happy with my life as it is.' He was very overbearing about being a Muslim but Musa was not at all like that.
"I would say Musa is more westernised than his brother. He's a lovely guy."
Around 10 officers were present at Mr Akmet's Eltham home on Monday. At 11.55am an officer was seen removing two black bin liners from the house.
According to residents, nobody has been allowed into the house since the arrest, including Mr Akmet's four children, aged 20, 19, 15 and 13.
Reece Osborn, 15, is friends with one of Mr Akmet's children.
He said: "I'm good mates with Khan Abraham, he's around 15. They're a sound family. He never mentioned a mum, but I know he lived there with his dad. I'd be shocked if he had anything to do with terrorism."
Greek-born Dimidrious Stefanidi, 33, who has lived in nearby Katherine Gardens for a year, said: "It's very scary living here and wondering what is going on.
"There are police everywhere and everyone is gossiping about what is going on."
Neighbours of Mr Abdullah were equally shocked. Thirty-six-year-old Kaday Kamara, who lives two doors away from his house in Rangefield Road, Downham, said: "I did not see him all the time but he would always say 'hello'.
"I'm surprised and shocked about what has happened."
Police have raided 17 homes across south and east London, as well as an Islamic school near Tunbridge Wells.
Searches on the 54-acre grounds of Jameah Islamiyah school near Crowborough, East Sussex, could continue for weeks, police said.
The suspects are thought to have attended regular weekend camps at the school, which allegedly included extremist lectures and survival lessons.
Detectives said the arrests, all on suspicion of the commission, preparation or instigation of acts of terrorism, were not linked to the alleged plane plot or the July 7 bombings.
Scotland Yard and MI5 watched the group for months before swooping on Friday night.
Officers received extra time to question eleven of the men until Friday and the other three until Wednesday.
Additional reporting by Chris Johnson.
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