British police on Thursday said they foiled a plot to blow up several aircraft flying between Britain and the United States in what Washington said might have been an attempted al Qaeda strike.

"We are confident we have disrupted a plan by terrorists to cause untold death and destruction," said London police's Deputy Commissioner Paul Stephenson. "Put simply, this was intended to be mass murder on an unimaginable scale."

Britain and the United States stepped up security, causing severe delays at airports following the announcement of the reported plot, which a police source said was believed to involve a "liquid chemical" device.

Twenty-one people were being held after swoops in London, southeast England and Britain's second biggest city, Birmingham.

A British security source said an attack was "imminent" and could have been carried out in the next couple of days.

The suspected plot raised the possibility of another attack to rival the scope of the September 11 attacks on the United States.

Departure halls were jammed with people, waiting as airlines canceled flights and trying to sort out their bags as hand luggage and liquids were banned from flights and passengers with babies were made to publicly taste their food.

"It's tough. We have nine pieces of luggage and we are going to have to bring it all to the hotel and back," said Michael Suncin, who was en route to Sweden and standing in a long queue for hotel reservations at London's main Heathrow airport.

US Homeland Security Secretary Michael Chertoff said that, while the operation was centered on Britain, it was international in scope and sophisticated, and involved many people.

"This operation is in some respects suggestive of an al Qaeda plot, but because the investigation is still under way, we cannot yet form a definitive conclusion," he said.

British police sources did not rule out an al Qaeda link, but played down direct involvement by the global militant group. Police sources said some of those arrested were British Muslims.

The security alert comes 13 months after four British Islamist suicide bombers killed 52 people and injured about 700 on London's transport network.

Interior Minister John Reid said police were confident the main players had been detained in raids overnight.

Chertoff said the plot focused on US air carriers. A US official speaking on condition of anonymity said Continental Airlines, United Airlines and American Airlines flights had been targeted for attack.

The US Department of Homeland Security raised the threat level for UK-US passenger flights to "red", its highest level, for the first time. US authorities banned liquids, including drinks, hair gels and lotions, from US commercial flights.

Britain's security services upped the threat level in the country to "critical" from "severe", the highest of its five ratings, which means "an attack is expected imminently".

Shares in European airlines fell, with British Airways shares down more than 5 percent. The pound fell against the dollar and the euro. Oil prices fell to below USD$76 a barrel on fears the security threat might hurt consumer confidence, slowing growth worldwide and reducing demand for oil.

Britain has been criticized by Islamist militants for its military campaigns in Iraq and Afghanistan.

British Prime Minister Tony Blair has also come under fire for following the US lead and refusing to call for an immediate ceasefire in the war between Israel and Hizbollah guerrillas.

Blair's office said the prime minister, who is on holiday in the Caribbean, had briefed President Bush.

"There has been an enormous amount of cooperation with the US authorities which has been of great value and underlines a threat we face and our determination to counter it," Blair said in a short statement.

"This liquid explosive type of attack is particularly worrying," Peter Neumann, director of the Centre for Defence Studies at London's King's College university, said.

"Planes remain vulnerable and in the coming weeks terrorists will be thinking of something else to do that we have no idea about," he said.

Neumann said the suspected plot appeared similar to a 1995 plan to blow up 11 planes using nitroglycerine mixed in contact lens solution and a battery powered detonator hidden in a shoe.

Last month, al Qaeda called on Muslims to fight those who backed Israel's attacks on Lebanon and warned of attacks unless US and British forces pulled out of Iraq and Afghanistan.

Al Qaeda hijacked passenger aircraft in September 2001 to destroy the World Trade Center in New York, and Briton Richard Reid was arrested in December 2001 for trying to blow up a plane headed to the United States.