A judgment by MI5 and the police that a Mumbai-style attack in the UK is now less likely led to a reduction on Monday of the terrorist threat from "severe" to "substantial", Whitehall sources have told the Guardian.
Other factors that led to the decision include the arrest of terrorist suspects in December in Cardiff, Stoke and London, a view that al-Qaida's leadership is "struggling" after the death of Osama bin Laden, and the killing by Somali government forces of Fazul Abdullah Mohammed, the al-Qaida leader who masterminded the attacks on US embassies in east Africa in 1998.
The decision was taken by the Joint Terrorism Analysis Centre (Jtac), comprising officials from MI6, MI5 and the police. It acts independently of ministers.
The threat level was increased to severe in January 2010 after the failed attempt by the so-called "underpants" bomber, Umar Farouk Abdulmutallab, to bring down a Detroit-bound passenger aircraft. Last year MI5 was pursuing leads about a possible Mumbai-style attack in the UK. That threat has now dissipated, officials believe.
The threat level from Northern Ireland-related terrorism remains at severe in Northern Ireland and substantial in Great Britain.
The change in the official threat assessment – first made public in 2006 – means that an attack in Britain is no longer classified as "highly likely" but is instead regarded as "a strong possibility".
Theresa May, the home secretary, said: "The change in the threat level to substantial does not mean the overall threat has gone away – there remains a real and serious threat against the United Kingdom."
The threat assessment by Jtac is based on the latest intelligence, including capability, intent and timescale. The threat level was last at critical in June 2007, following an attack at Glasgow airport and failed car bombings in central London.
The change came as Home Office lawyers appealed to the high court to uphold a control order imposed on a terror suspect known as "CD" which bans him from travelling to London.
The security services have identified CD as a father of two with joint Nigerian-British nationality who is the leading figure in a "close group of Islamic extremists based in north London".
They claim he trained alongside the 7 July bombers in 2004 and underwent further training in Syria, for three years where he began planning an attack in the UK. The high court is being asked to quash the use of the control order's "relocation" powers, which ban him from travelling to London.
The Home Office justified the continued use of these "internal exile" restrictions on the grounds that he and his associates intend to carry out an attack on targets "most likely in London". The relocation power has been dropped from the government's replacement for control orders now before parliament.
CD denies the allegations against him. His lawyers say the security assessments are flawed and there is insufficient evidence to justify the control order. They say the distress being caused to him and his family is "disproportionate".
Corinna Ferguson, legal officer for Liberty, said that clear allegations that someone had been training for terrorism, attempting to procure arms and meeting with co-conspirators to plan atrocities should lead to their being charged and tried. "Shuffling him between addresses around the country provides neither certainty for his family nor safety to the public," she said.
