Mustafa Kamel Mustafa, 47, also known as Abu Hamza al-Masri also is charged in the 11-count indictment with hostage-taking and conspiracy in connection with a December 1998 incident that left four tourists dead in Yemen.
"Those who support our terrorist enemies anywhere in the world must know that we will not rest until the threat they pose is eradicated," U.S. Attorney General John Ashcroft said in announcing the arrest Thursday.
The arrest came a day after top U.S. law enforcement officialsindicates a major terror attack could occur in the summer, and the FBI posted a list of seven wanted al Qaeda operatives.
Al-Masri is not among the seven wanted figures, but has been the focus of terror suspicions for years in Britain. The Egyptian-born cleric formerly preached at the Finsbury Park Mosque in London, which has been linked to several terrorist suspects.
Al-Masri has sparked outrage with sermons calling the invasion of Iraq a "war against Islam," claiming the Sept. 11 attacks were a Jewish plot and calling the Space Shuttle Columbia disaster a "punishment from Allah" because Christian, Jewish and Hindu astronauts were aboard.
Besides the hostage taking charges, the U.S. indictment, which was handed down by a grand jury in April, also carries allegations of proving support to "violent jihad in Afghanistan."
"Think of (al-Masri) as a freelance consultant to terrorist groups worldwide," said New York Police commissioner Ray Kelly, whose department was involved in the investigation.
Ashcroft said al-Masri provided a cellular phone to the terrorists who attacked a convoy of Western tourists in Yemen in 1998, and then offered to serve as an intermediary for the hostage takers. When the Yemeni military tried to rescue the hostages, four were killed and others injured.
Regarding the proposed terrorist camp in Bly, Ore., Ashcroft said al-Masri learned that his co-conspirators were "stockpiling weapons and ammunition in the United States" and received a fax on the creation of the camp.
From spring 2000 to Sept. 6, 2001, Ashcroft said, al-Masri posted messages on an Islamic Web site asking supporters to donate money to the Taliban. One of al-Masri's co-conspirators allegedly traveled to New York to raise funds that were deposited in a Finsbury Park mosque account.
That account later paid the travel costs for two men to go to Afghanistan, where al-Masri asked one of the men to seek out a commander at a terrorist training camp, Ashcroft alleged.
The hostage-taking charge carries a penalty of death. The other counts could be punished with up to 100 years of prison time.
"We are actively seeking (al-Masri's) extradition from Great Britain to face justice in put courts on these serious charges," Ashcroft said.
CBS News legal consultant Andrew Cohen notes that the Justice Department has asked Britain, which does not normally extradite suspects to face the death penalty, to hand over al-Masri for trial on charges that carry the threat of execution.
"Something's got to give and it may end up being a political question as much as it is a legal one," Cohen notes.
London's Metropolitan Police press office said that officers from the Extradition and International Assistance Unit arrested a "British citizen, aged 47" at about 3 a.m. Thursday following an American request for his extradition.
Al-Masri's lawyer, Maddrassar Arani, told British Broadcasting Corp. radio that she had spoken to her client, who was being held in a central London police station.
"He was quite calm about it," Arani said. "He said take your time and come down whenever you can."
Anti-terrorist officers also conducted a search of al-Masri's west London home, police said.
Al-Masri is one of Britain's best-known Islamic radicals. He has been fighting deportation by the government. He is also wanted in Yemen on charges of orchestrating terrorism there from Britain.
In April, an FBI official told Congress that the U.S. had in 2002 detained Earnest James Ujamma as a material witness in part because he tried to start a terrorist training camp in Oregon as part of al-Masri's "jihad recruiting program, and served as (al-Masri's) representative for the delivery of cash, computer hardware and software, and at least one combatant to Taliban and al Qaeda activities inside Afghanistan."
The British government revoked his British citizenship in April 2003, calling him a threat to the country's interests. He has appealed that decision to a special immigration tribunal and a ruling isn't expected until early next year.
At an immigration hearing last month, a government lawyer said al-Masri had "provided advice and support to terrorist groups," including al Qaeda and the Islamic Army of Aden, the organization that claimed responsibility for the bombing of the USS Cole in Yemen in 2000.
The lawyer said al-Masri had encouraged others to engage in jihad, "including fighting overseas and engaging in terrorist acts."
Al-Masri, who married a British woman and took British citizenship in 1981, denies any involvement in violence and says he is only a spokesman for political causes.
The fiery preacher with one eye and hooks for hands — lost, he says, fighting Soviet troops in Afghanistan in the 1980s — is a tabloid hate figure in Britain.
The Finsbury Park Mosque was been linked to several terrorist suspects, including Sept. 11 suspect Zacarias Moussaoui and "shoe bomber" Richard Reid.
The mosque was shut down by its trustees after a police anti-terrorist raid in January 2003. The next month al-Masri was banned from preaching there by a government body because his "extreme and political" statements conflicted with the mosque's charitable status.
Since then the cleric has led Friday prayers on the street outside, under the watch of police.