Umar Farouk Abdulmutallab has been charged over the incident
The suspected Detroit plane bomber tried to contact radical Islamists while in London and the intelligence was shared, Downing Street has said.
No 10 said information about Umar Farouk Abdulmutallab was passed to American intelligence but he was not deemed to be a "particular risk".
Downing Street still insisted the suspect was radicalised in Yemen after he left the UK in October 2008.
The alleged bomb plot has sparked a global review of aviation security.
Mr Abdulmutallab, who is now in US police custody, allegedly attempted to ignite explosives stored in his underpants as Northwest Airlines Flight 253 made its final descent to Detroit on 25 December.
The 23-year-old Nigerian was included in a dossier of people believed to have made attempts to deal with known extremists in the UK.
US President Barack Obama has criticised US intelligence agencies for failing to piece together information about the suspect which should have stopped him boarding the flight.
Mr Abdulmutallab took an engineering with business finance degree at University College London (UCL) between September 2005 and June 2008 and was president of its Islamic Society between 2006 and 2007.
On Sunday, a newspaper reported counter terrorism officials knew Mr Abdulmutallab had "multiple communications" with Islamic extremists in Britain during his student days.
The Sunday Times said officials were aware of repeated contacts with MI5 targets who were under surveillance but that the information had not been shared at the time.
The prime minister's spokesman denied this was the case.
"Clearly there was security information about this individual's activities and that was information that was shared with the US authorities," he said.
"We are pretty certain he was radicalised outside the UK. He left the UK in October 2008. But it is also clear that whilst he was here he was attempting to make contact with people and that is the intelligence we were able to secure from the intelligence services."
Gordon Brown's spokesman defended the decision not to single out the Nigerian as a risk.
"There are a number of individuals who try and reach out to radicals and others," he said.
"It does not necessarily mean they are going to be planning any specific action. Whatever he decided to do, he decided to do whilst he was out of the country."
Mr Abdulmutallab was barred from re-entering the UK after his spell as a student. He was refused a visa in May and placed on a watch-list after he applied to study at a bogus college.
The alleged failed bomb attack has placed Yemen and its al-Qaeda affiliates under the international spotlight. Last week, al-Qaeda in the Arabian Peninsula said it was behind the plot.
Both the UK and US authorities have said they will increase support to the country to counter the emerging terror threat.
France has followed the US and UK and shut its Yemen embassy because of "ongoing threats" by al-Qaeda in the Arabian Peninsula.