Britain's internal intelligence agency M15 is conducting investigations on almost 8,000 suspected Al-Qaeda sympathisers, a report said on Friday.
The operation nicknamed 'Rich Picture' also aims at recruiting agents within the Islamist movement, 'The Independent' newspaper said.
"The huge covert inquiry, is aimed at finding people who are being groomed for terrorism, and at identifying the Islamist extremists carrying out the recruitment," the report said.
Out of the estimated 1.6 million muslims living in Britain, counter-terrorist sources believe up to 0.5 per cent - about 8,000 - support Al-Qaeda's aims, and have links to Islamist extremists, according to the report.
"The nationwide investigation follows intelligence suggesting there is a very small, but significant number of British-born and Britain-based muslims, who are prepared to carry out bombings and other terrorist attacks in this country," it said.
Information is collected from all over the country, including colleges, mosques and internet websites where extremists may try to "groom" or radicalise the sympathisers.
The operation which began shortly after the suicide bombings in London in July last year, is being done by MI5 officers based at new regional stations with the help of GCHQ, the government's eavesdropping centre in Cheltenham.