A British teenager has been arrested on suspicion of terrorist activities after handwritten notes about martyrdom, propaganda from Al Qaeda [Images] and instructions on how to make napalm bomb were found at his house.

Eighteen year-old Hammaad Munshi of Dewsbury, West Yorkshire, told the Blackfriars Crown Court in London [Images] on Monday that he had been in regular telephone contact with another terror suspect, Aabid Hussain Khan from Bradford.

Khan, who hosted an extremist web site, was stopped at the Manchester airport on his way back from Pakistan in June 2006. He was carrying two computer hard disk drives that contained thousands of documents, videos and audio files.

Prosecutor Simon Denison said the information on napalm (a fire-bomb fuel gel mixture that sticks to the skin as it burns), weapons and poisons implied that Khan possessed a "terrorist encyclopaedia or library that could enable him or others to plot terror attacks here or abroad".

Munshi, Khan and co-defendants Sultan Muhammad from Bradford and Hassan Suleiman from Woolwich, south London, however, denied the charges, including possessing and making record of articles used in plotting a terror attack.