One of the London bombers was investigated by MI5 last year but was deemed not to be a threat, it has been revealed.
Khan was deemed not a threat when investigated by MI5 last year
Mohammad Sidique Khan, 30, was subject to a routine assessment by the security service because of an indirect connection to an alleged terror plot.
He was one of hundreds investigated but not considered a risk.
It had previously been believed that the four bombers were unknown to British security services.
Fifty-five people died in the London attacks, including the four bombers.
Khan, from Dewsbury, West Yorkshire, killed himself and six other passengers in the Edgware Road bombing on the London underground.
Germaine Lindsay: Jamaican-born man living in Buckinghamshire. Believed to have carried out King's Cross attack.
Mohammad Sidique Khan: Aged 30, from Beeston, Leeds, recently moved to Dewsbury, married with baby. ID found at Edgware Road blast site.
Hasib Mir Hussain: Aged 18, lived Holbeck, Leeds. Reported missing on day of bombings. Said to have turned very religious two years ago. ID found in No 30 bus.
Shehzad Tanweer (above): Aged 22, born Bradford, lived Beeston, Leeds. Studied religion in Pakistan. Forensic evidence linking him to Aldgate blast.
Hasib Hussain, 18, from Holbeck, Leeds was responsible for the Number 30 bus bombing, in which 13 people died; Shehzad Tanweer, 22, from Beeston in Leeds for the Aldgate Tube blast, which killed six, and Germaine Lindsay, 19, from Aylesbury, Buckinghamshire, for the King's Cross Tube explosion in which 26 people were killed.
Former Scotland Yard Commander Roy Ramm told BBC News the news about Khan and MI5 was not surprising.
"It doesn't surprise me that this man has been identified in MI5's operation because this thing is like concentric circles, the further out they are the less likely MI5 are to have resources that they can apply to them in terms of surveillance, and surveillance is very costly."
Earlier, Lord Chancellor Lord Falconer said no internal inquiry had been launched into why the London bombers were not picked up by the security services.
He said "now is not the time" for an inquiry, but for a decision on what legal steps were needed against terror.
And he denied proposed new anti-terror measures, to be discussed by the three main political parties on Monday, were "slamming the stable door after the horse had bolted".
On Saturday, police released a CCTV image of the four London bombers together as they set off on their deadly mission.
The four men were pictured entering Luton rail station at 0720 BST on Thursday 7 July on their way to London.
Authorities in Pakistan say they are placing Islamic religious schools under closer scrutiny, after reports that one of the bombers attended one last year.
The move to monitor Pakistan's religious schools - known as madrassas - came after reports Tanweer attended one of them last year.
Pakistan's Interior Minister Aftab Khan Sherpao told the BBC far closer scrutiny would be given to madrassas preaching extremist views.
But a leading Pakistani diplomat has said the UK should not try to blame foreign countries for influencing the bombers.
Munir Akram, Islamabad's ambassador to the United Nations, spoke after reports linking his country to the killers.
Speaking on The World This Weekend he said: "You have to look at British society - what you are doing to the Muslim community and why the Muslim community is not integrating into British society,... and not try to externalise the problems Britain faces with regard to race and religious relations."
The Lord Chancellor told BBC News under new laws people "attacking the values of the West" and "glorifying the acts of suicide bombers" would be imprisoned for "long periods" and "deported wherever possible", but no law could stop terrorism altogether.
"The evil ideology driving this is getting to the hearts and minds of a very small number of people," Lord Falconer added.
Shadow home secretary David Davis told BBC News the bombers had intended to "drive a wedge into British society", leaving Muslims alienated "and in that way act as a recruiting sergeant for more young men in the future".
Germaine Lindsay is believed to be responsible for the King's Cross bombing
"We have got to stop that."
Mr Davis urged Muslim leaders to be "very, very firm".
"They should not allow any doubt whatsoever these sort of events are condemned - wherever they happen, whatever the excuse - it is always evil to undertake suicide bombing."
On Saturday, Tony Blair said it was time to stand up to the "evil ideology" behind the London bombings and other attacks.
He said such violence was not a response to any particular policy or injustice, but was a "fanaticism" that had to be confronted.
The families of Khan, Hussain and Lindsay have all issued statements expressing their shock and sadness.
Tanweer's uncle also said the family had been "left shattered" by news of his involvement.
British police are now searching for those who may have helped the bombers carry out the attacks.
One house being searched in Leeds is linked to Egyptian biochemist Magdi Mahmoud al-Nashar, 33, who was arrested in Cairo as part of the inquiry into the bombings. He has denied any involvement.
Egypt's interior minister said press reports linking Mr al-Nashar to al-Qaeda were "groundless" and based on a hasty conclusion.
Other properties being searched are the Holbeck home of Hussain, the Dewsbury home of Khan, and the Beeston home of Tanweer.
The bombed bus was moved from Tavistock Square on Saturday
Lindsay lived in the property being searched in Aylesbury.
On Saturday police sealed off and searched a house in Tempest Road, Beeston, Leeds, not far from where Tanweer lived.
On Sunday, public vigils took place in Edinburgh and Glasgow to remember the victims of the bombings.
The gatherings, organised by a groups including the Muslim Association of Britain, aimed to show opposition to Islamophobic attacks since the explosions.
Police are urging anyone with information that could help their investigation to call the confidential Anti-Terrorist Hotline on 0800 789 321.