The Canadian counter-terrorist agents could scarcely believe their ears. For two years they had been clandestinely monitoring a hapless group of homegrown Islamic militants who had appeared more interested in playing war games in the Toronto suburbs than posing a significant threat.

Yet now the posturing and pretending was over. Electronic surveillance and other intelligence sources had detected planning for an attack too shocking to ignore as wishful thinking or idle chatter.

The careless militants who only a few months before had held a “training” session with automatic weapons in the Canadian woods — oblivious to the fact that their every move was being watched by police — had split into two groups preparing potentially catastrophic assaults.

The most radical group, led by Zakaria Amara, a 20-year-old Canadian citizen from the suburbs, was allegedly aiming to drive lorries packed with home-made explosives into Toronto’s skyscraper-filled city centre.

Members of the group were trying to obtain three tons of ammonium nitrate fertiliser — three times the amount used by Timothy McVeigh for the Oklahoma City bombing in 1995.

Their targets allegedly included the Toronto stock exchange and the local headquarters of the Canadian Security Intelligence Service (CSIS), the equivalent of Britain’s MI5. The buildings housing both organisations are normally packed with workers. Amara was alleged last week to have relished the prospect of inflicting mass civilian casualties.

The second group, led by Fahim Ahmad, a 21-year-old Canadian, was meanwhile discussing a wide range of possible targets to protest at Canada’s military presence in Afghanistan. Among the proposals recorded by intelligence services was an improbable plot to storm the parliament building in Ottawa and to behead the prime minister, Stephen Harper, if he failed to order Canadian troops home.

The security forces’ decision to terminate their surveillance operations and swoop on the Toronto groups earlier this month not only prevented what might have become the worst terrorist assault in Canadian history. It has also provided an intriguing glimpse of what one security source described as a “treasure trove” of intelligence on the structure and worldwide communications of the so-called home-grown terror networks that have sprung up independently of Al-Qaeda in Madrid, London and other western cities during the past few years.

The Canadian intelligence has proved so good, one senior security source said last week, that the CSIS may have successfully infiltrated a government informer into the Toronto cell.

The break-up of the Toronto group and the arrests of 17 Canadian citizens were last week linked to the subsequent arrests in Britain of a 21-year-old man at Manchester airport on Tuesday and a 16-year-old man in Dewsbury, Yorkshire on Wednesday. The man detained in Manchester had arrived on a flight from Pakistan and is reportedly suspected of involvement with Lashkar-e-Tayyiba (Army of the Pure), a militant Islamist group accused of operating terrorist training camps in Pakistani-controlled Kashmir.

Police are also investigating whether there are any links between members of the Canadian group and Younis Tsouli, a London-based internet hacker who was arrested by British police last October. Tsouli has pleaded not guilty to eight terrorism-related charges.

There were also reports of a Canadian connection with the arrests of two men in Atlanta, Georgia, last year; and with counter-terrorist raids in Bosnia and Denmark last October.

Members of the Toronto cell are now known to have been under close surveillance since at least November 2004, when some of them were identified by Canadian agents monitoring websites sympathetic to Al-Qaeda.

Amara is believed to have first begun posting radical poetry on Islamic websites in 2002, when he was 16 years old. One of his poems reads in part: “Yes I know my bones are very tender/And by Allah, you won’t see me surrender.”

He was also a fan of Delta Force, a gung-ho computer game that allows players to pretend they are part of America’s clandestine special forces unit. In one online discussion of terrorist training, Amara reportedly wrote: “if ur [sic] intention is that of training, then go to Peshawar or Kashmir and train properly”.

Yet it emerged last week that his group instead went training last Christmas in the woods north of Toronto. Apparently unconcerned that someone might notice them, the plotters wore military-style camouflage gear, carried several automatic weapons, and shot up the Hindu statues they had brought for use as targets. Neighbours promptly called the police to complain about Islamic-looking gunmen wandering around the area. Although they might have been arrested at the time on weapons and other minor charges, the security forces chose to keep them under surveillance in the hope that their activities might shed light on a broader international conspiracy.

Security experts suggested last week that the Canadian authorities had taken a huge risk by allowing the plotters to remain at large for so long.

Yet the CSIS was so confident it knew what Amara and his men were up to that it allowed them to conspire for six more months. One former intelligence agent said that risk could only have been justified had there been a government mole in a key position in the group.

The Toronto group’s demise was ultimately precipitated by Amara’s plan to purchase the bomb-making ammonium nitrate. He allegedly tried to disguise the online purchase by splitting it into small amounts that were ordered with the e-mail identity “studentfarmer”.

Officials apparently concluded that the group had gone far enough. Police and security forces combined in a “sting” operation that substituted a harmless powder for the fertiliser Amara thought he was buying.

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