Police in Italy and Germany have arrested three North Africans suspected of recruiting suicide bombers for attacks linked to al-Qaeda in Iraq.
Nineteen Italians were killed in a suicide attack in southern Iraq
"We have managed to break up a mujahideen recruiting centre," Italy's interior minister announced.
The ring's suspected leader, an Algerian known as "the Sheikh", was picked up in Hamburg early on Friday.
A Moroccan and a Tunisian were detained in Milan late on Thursday but two other suspects managed to elude capture.
The Italian authorities say the police sweep was jeopardised when news of the operation leaked to the media.
An Iraqi male suspect and a Tunisian female suspect remain at large and may have fled the country, the interior ministry said, confirming that five arrest warrants had been issued.
The arrests come just over two weeks after a suicide bombing killed 19 Italian soldiers and policemen in Nasiriya, southern Iraq.
'Allied to al-Qaeda'
Italian Interior Minister Giuseppe Pisanu said the alleged ring had been recruiting inside Italy.
MAJOR IRAQ SUICIDE ATTACKS
12 Nov: 19 Italians and nine Iraqis killed in attack on Italian HQ in Nasiriya
27 Oct: Wave of bombers attack Red Cross HQ and police stations in Baghdad, killing more than 30
12 Oct: Baghdad Hotel bombed, six dead
9 Oct: Police station in Baghdad bombed, 10 killed
19 Aug: UN headquarters in Baghdad bombed, 23 killed including head of mission Sergio Vieira de Mello
"People were being approached in Italy and then being sent to training camps in north-eastern Iraq," he said.
"They were being given training by a group known as Ansar al-Islam... which is known to be allied to al-Qaeda."
One of the Italian intelligence services said it believed the suspected terror cell had already recruited Islamic militants who had committed suicide missions in Iraq.
The Algerian suspect, 30-year-old Mahjub Abderrazak, had previously been detained in Hamburg in July on suspicion of involvement with bomb attacks in Spain but was released due to lack of evidence. He now faces possible extradition to Italy.
Those arrested in Milan were identified by Italian officials as 20-year-old Housni Jamal from Morocco and 33-year-old Tunisian Bouyahia Maher Ben Abdelaziz.
Reports say that a sixth suspect, a Tunisian man, was arrested last Saturday for allegedly providing logistical support and papers to the other five.
The BBC's Frances Kennedy in Rome says the Milan prosecutor's office has launched an inquiry into how news of the planned arrests was leaked before the police operation had even begun.
They are being charged with subversive association aimed at international terrorism.
This is not the first time the Italian authorities have drawn a link between Islamic extremists in Italy and suicide attacks in Iraq.
In April, they said extremists were being approached in Italy and Germany and sent to training camps in Syria before joining a group connected with al-Qaeda in northern Iraq.
UK police are meanwhile questioning a man suspected of having al-Qaeda links, who was arrested at a house in Gloucester, western England, where explosive materials were found on Thursday.
The 24-year-old is being investigated for possible links with British man Richard Reid, who was convicted of trying to blow up a plane with explosives hidden in his shoes.
It has also emerged that a 33-year-old man has been arrested under the Terrorism Act in the city of Birmingham, central England.