Top British Terror Suspect Escapes

The alleged British terrorist mastermind behind a plot to simultaneously blow up at least 10 transatlantic airliners in an atrocity that had the potential to dwarf 11 September was on the run last night.

One of Britain's most wanted men slipped his handcuffs and fled after appearing at a court in Islamabad, Pakistan, where his lawyers were protesting against requests for his extradition. Last night two policemen were being questioned about the incident.

Rashid Rauf's escape now threatens to spark a major diplomatic row by reigniting questions about why Pakistan's authorities had not approved his extradition, despite repeated requests from Britain dating back more than a year. Britain has been at pains to claim that Pakistan's President, Pervez Musharraf, is a key ally in targeting Islamist terrorism and someone who has played a vital role in sharing information between the countries' intelligence communities. But the fact Rauf was able to escape so easily will raise questions about the security status given to him by the Pakistani authorities.

It is also likely to inflame relations with the US. The Observer understands the CIA was preparing to 'render' Rauf when details of the alleged airliner plot emerged in August 2006. Alarmed at the US's attempts to grab Rauf, Britain's intelligence services, who had been monitoring the plot, swooped, arresting more than 20 suspects in the largest security operation of its kind.

Now the news that Rauf is at large threatens tensions between the UK and US authorities who believed their transatlantic counterparts should have moved to pick up the alleged plot's ringleaders far earlier.

Rauf is alleged to have played a key role in presiding over an audacious plot to detonate explosions on 10, possibly more, transatlantic jumbo jets in August 2006. But though picked up by the Pakistan intelligence service, the ISI, before the plot had been made public, Rauf was not extradited to Britain. The Observer understands from senior figures in the security service that they were becoming very frustrated at Pakistan's reluctance to hand over Rauf.

One senior intelligence source told The Observer that the airliner plot could have resulted in more fatalities than 9/11. The source said if successful, it would have seriously damaged the two allies' close relationship. 'Can you imagine what it would have done to relations between the two countries if British citizens had ended up killing hundreds of Americans?' the source asked.

Rauf, who denies any connection with the terrorist plot, was held in Pakistan on charges of being in possession of false identity papers and bomb-making materials.

But he was also wanted in the UK for questioning in connection with the murder of his uncle in Birmingham in 2002. It was on these grounds that his extradition was being sought.

Recently there were suggestions that Rauf was to be traded for two terrorist suspects wanted by the Pakistan authorities. Last week the UK arrested Faiz Baluch, 25, and Hyrbyair Marri, 39. The men are alleged to be terrorists who want separation for Baluchistan, a province of Pakistan. The British government said there was no link between its demands for the extradition of Rauf and the pair's arrest.

Last night Rauf's relatives expressed astonishment that he had fled. 'I don't know anything - I'm shocked,' his father, Abdul Rauf, said. Rauf's lawyer, Hashmat Habib, said his client had been brought to court in connection with the extradition proceedings, but that he did not know how Rauf had escaped.