One of three alleged members of Al Qaeda detained in Germany was ordered by a high-ranking member of the group last year to carry out an attack in the country, prosecutors said on Saturday.
The 29-year-old suspect, identified as Abdelakim El-K, "was ordered by a high-ranking member of Al Qaeda in 2010 to carry out an attack in Germany," the deputy federal prosecutor general, Rainer Griesbaum, said at a press conference.
German police had on Friday detained the three alleged Al Qaeda operatives.
Griesbaum said the suspects had begun preparing explosives for the attack but that a target had not been selected.
The head of the German federal police, Joerg Zierck, said Abdelakim El-K had been living illegally in Germany since November 2010 and had connections in Austria, Morocco, Kosovo and Iran.
The daily Bild earlier reported that the three were from the Western German state of North Rhine-Westphalia and were caught with "large amounts of explosives".
Citing security sources, the newspaper said they were suspected of plotting attacks in Germany. They came to the attention of the federal crime office during surveillance of mobile phone and computer communications.
Other media reports said Abdelakim El-K, the group's apparent leader, was trained in an Islamist camp in Waziristan, the border region between Pakistan and Afghanistan.
Reports said the men had been under surveillance since late 2010, had attracted attention when they attempted to buy large amounts of key chemicals at pharmacies and had been planning to strike at public transport in a big city.
German authorities hiked security measures in November after US authorities warned of an Al Qaeda plot to carry out "Mumbai-style" attacks in Britain, France and Germany.
US authorities handed over to Germany last week the source of the tip, alleged Islamic militant Ahmed Wali Siddiqui, who had been held for nine months in Afghanistan.
Germany, which opposed the 2003 US-led invasion of Iraq but has nearly 5,000 troops in Afghanistan under Nato command, has never experienced an attack by Muslim extremists on its own soil.
But authorities say the Islamist scene is large and dangerous.
The closest it has come to an attack was in July 2006 when Islamic militants placed suitcases with homemade bombs on two regional trains at Cologne's main station. They failed to detonate, averting an almost certain bloodbath.
And in 2007, three men including two German converts to Islam were caught plotting attacks on US interests in Western Germany in what authorities said was a bid to mount a "second September 11."
They were sentenced in 2010 to lengthy prison terms.