The alleged British al-Qaeda chief was being questioned by police in Pakistan who say he telephoned the four suspect suicide bombers just hours before the attack, a report said.

Britain has been keen to take a pro-active stance following its worst terrorist attack, pledging to rush through a raft of tough anti-terror laws.

The government is also considering an international conference on how to snuff out Islamic extremism, with Blair taking a particular aim at Islamic religious schools or madrassas, suspected of spreading extremist ideology.

The prime minister, however, is keen to find out if more can be done, with the controversial issue of whether evidence from phone-tapping should be allowed in court expected to crop up in Thursday's meeting with security heads.

Security officials in Islamabad said they were holding 228 suspects, but denied media reports that Haroon Rashid Aswat was among the detainees.

For their part, Scotland Yard and the Home Office declined to comment on the latest reports about the investigation into Britain's worst terrorist attack, which ripped through London's subway network and a bus exactly two weeks ago.

The respected Times newspaper, however, reported that the 30-year-old suspected terror mastermind was arrested during one of many raids on Islamic religious schools, known as a madrasas.

"We believe this man had a crucial part to play in what happened in London," it cited a senior Pakistani source as saying.

Responding to the news, Aswat's father, Rashid, who lives in Batley, West Yorkshire -- the same town in north England as one of the presumed London bombers -- said he had lost contact with his son many years ago.

"We are being asked about Haroon Rashid Aswat. He has not lived at this house and we have not had contact with him for many years," he said in a statement, adding that his son had received a normal upbringing and education and at the age of 19 began studying at a local madrasa.

An unnamed brother told the regional Yorkshire Post newspaper that Aswat moved to London 10 years ago and the family had not seen him since.

We are not sure where he went and can't answer why he has not been staying in touch," he said.

The Times, citing anonymous intelligence sources, said the key suspect was understood to have been posing as a businessmen and using a false name.

He was picked up in a raid at a madrasa at Sargodha, 144km from Islamabad, by Pakistani intelligence officials and flown to a prison in the capital, the daily said in a front page article.

Scotland Yard had been hunting the man since he flew out of Britain after the July 7 attacks on the subway and a bus in London, according to The Times.

Raising suspicions, it claimed that the suspect arrived in Britain a fortnight before the bombings to orchestrate final planning for the attack. He allegedly spoke to the suicide team on his mobile phone a few hours before the four men blew themselves up and killed 52 other people.