Former Metropolitan Police Commissioner Sir John Stevens says up to 200 Al-Qaeda "terrorists" are operating in UK and the threat of attacks is real.
Sir John said up to 200 militants were on the streets of Britain
He has backed proposed anti-terror laws, saying critics were naive about the "brutal" threat posed by fanatics.
Sir John, writing in the News of the World, said militants trained by Osama bin Laden "fester" across the country.
But the Liberal Democrats accused him of sending "mixed messages" adding to an already "complicated situation".
The Prevention of Terrorism Bill, which passed through the Commons by 14 votes last week, faces further opposition when it reaches the House of Lords next week.
Among the proposals for terror suspects are house arrest, curfew, tagging and bans on internet and telephone use.
But civil rights groups have criticised the government plans and called for an end to detention without trial.
Foreign terror suspects are held at Belmarsh prison in London without trial, even though Law lords have ruled this breaches human rights legislation.
And critics say the principles of justice and human rights are fundamental to British law and should not be lost.
But Sir John said any delay in enacting the legislation would bring "comfort" to al-Qaeda.
He said there were small networks of militants who had been trained by Osama bin Laden and had "spawned and continue to fester" in British towns and cities.
"The main opposition to the Bill, it seems to me, is from people who simply haven't understood the brutal reality of the world we live in and the true horror of the terrorism we face," Sir John wrote.
Sir John said intelligence reports made his hair 'stand on end'
Liberal Democrat home affairs spokesman Mark Oaten said: "While Sir John is right to highlight the serious threat that we face we believe that strong principles of justice will not undermine national security.
"Of more concern are his comments that the current Belmarsh detainees pose a serious threat.
"This conflicts with the home secretary's opinion that they will not need to be placed under house arrest when they leave Belmarsh.
"These mixed messages are unhelpful in an already complicated situation."
Sir John said he had read intelligence on all of the foreign suspects currently being held without trial in prisons such as Belmarsh, and said they should be kept under "lock and key".
He said it should be down to judges, rather than just for politicians, to decide whether suspects were placed under house arrest.
But he said his hair had been made to "stand on end" reading reports of attacks militants planned to carry out in Britain.
He said the conviction of British-born militants such as Richard Reid showed the threat did not just come from overseas.
"The brutal truth is that there are more just like them, as much British citizens as you and I, living here now just waiting to kill and be killed in their awful misguided cause," he wrote.
The BBC's Danny Shaw said: "The language is very strong and may put some people off from the central thrust of what he's saying.
"But what he is saying, quite clearly, is the threat that is faced in the UK at the moment is not understood by people opposing the bill."