The younger brother of Manchester suicide bomber Salman Abedi was planning an attack on a United Nations special envoy.
Reports claim Hashem Abedi, 20, had plotted to assassinate Martin Kobler, the head of the UN Support Mission in Libya, during a visit to Tripoli earlier this year.
The terrorist cell were thought to be in the later stages of the plan, but it was foiled before it could be executed.
The Islamic extremist group had been monitored for some months by Libyan security services who believe the younger Abedi brother is a 'significant player, reports the Telegraph.
He was arrested at the Abedi family home in Tripoli on Tuesday and is being interrogated by MI6 and Libyan intelligence over his role in the Manchester Arena bombing last Monday.
Twenty two people were murdered and 119 injured when Salman Abedi detonated a nail bomb in his backpack, at an Ariana Grande concert packed full of young people.
Hashem has allegedly admitted buying the components of the explosive device.
The 20-year-old is said to have told interrogators that he and his brother supported Islamic State, and claimed that the attack was carried out in revenge for the conflicts in Syria and Iraq.
The brothers left Britain to visit their parents in Libya after stockpiling the bomb parts, before Salman returned to carry out his deadly mission.
Following his alleged confession Hashem could face extradition to the UK and stand trial over Britain’s worst terrorist atrocity since 7/7.
Ahmed Bin Salem, of Libya’s Special Deterrents Force, told The Mail on Sunday: ‘Hashem knew what Salman was doing. He knew he was planning an attack but did not know exactly when.
‘He has admitted buying the materials for Salman in Manchester.’
