Illegal immigrants Sofiane Kebilene, 31, Farid Boukemiche, 28, and Sofiane Souidi, 31, created false identities to set up bank accounts, take out bank loans and accrue credit and store cards.

They used the money to buy chemicals, radio, navigation equipment and lethal weapons which they sent to Algeria hidden in hi-fi equipment or tins of baby milk, the Old Bailey in London heard.

The "ringleader", Mr Kebilene, opened at least 17 different bank accounts as well as 22 store or credit cards using his real name and bogus identities, and falsely obtained a bank loan for over £18,000, the court heard.

'Weapons in house'

The men, suspected of being members of the Algerian Armed Islamic Group (GIA), were arrested in May last year in a joint operation between intelligence services and police.

Prosecutor Michael Sweeney said the arrests followed a raid on a house in Peckham, south London in which police found chemicals, weapons and radio equipment.

A search also uncovered £20,000 in cash and £13,000 in French francs, plus small amounts of American and German currency.

Mr Sweeney said the men had already sent seven shipments of chemicals to Algeria between 1992 and 1997.

The three men deny possession of articles for purposes connected with the commission, preparation or instigation of acts of terrorism.

The trial continues.