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BERLIN - A potentially ''massive'' terrorist attack against U.S. installations in Germany - linked to al-Qaida - was doomed to fail from the day in July when anti-terrorism police broke into a rented garage in Germany's picturesque Black Forest and found barrels of bomb-making chemicals, police said Wednesday.

Police had found the garage by tracking the movements of three men after one of them, a German national who had converted to Islam, was spotted in December casing a U.S. military barracks at Hanau, in central Germany, they said.

Authorities suspected that this man, joined by another German national who had converted to Islam and a Muslim Turkish resident were the core of the German cell of the Islamic Jihad Union, a terrorist group set up in Uzbekistan in Central Asia that has ties to al-Qaida and training camps in Pakistan.

Twelve blue barrels that police found in July contained a solution with 35 percent hydrogen peroxide, enough to make a bomb with the power of 1,200 pounds of TNT. To avoid tipping off the suspects that they were under surveillance, police drained the barrels and replaced the contents with a 3 percent solution - the same stuff found in first-aid kits, essentially useless as a bomb component.

As police monitored their travels, the suspects moved one of the barrels Saturday from the forest hiding place to a tourist cabin in Medebach-Oberschledorn, a village of 900 in central Germany, and allegedly began constructing bombs with what they thought was an explosive chemical. This week, they learned why their experiments were not going the way they had anticipated, police said.

After a chance encounter with a traffic cop, they lost their nerve and decided to flee, police said.

At 2:30 p.m. Tuesday, 600 anti-terrorism police moved in and arrested them, making them the latest in a long line of homegrown European terrorism suspects to be caught before they could act.

U.S. officials described the attempted bombings in Germany as a significant plot.

The al-Qaida network is thought to have re-established a presence in recent months - including training camps - in northwest Pakistan along the border with Afghanistan. ''There are connections'' between al-Qaida and the Islamic Jihad Union, according to a senior U.S. intelligence official. The group, which splintered from the Islamic Movement of Uzbekistan, is on the State Department's list of foreign terrorist organizations.

In Berlin on Wednesday, Wolfgang Schaeuble, the German interior minister, warned of a new wave of ''homegrown terrorism, not just here but across Europe.

''The fact that they had obtained military fuses tells us they were not semiprofessional, but fully trained terrorists.'' The German suspects were identified only as Fritz G., 28, of Ulm; Daniel S., 22, of Saarbruecken; and Adem Y., 29, of the central German state of Hesse.

Federal Prosecutor General Monika Harms charged Wednesday that the suspects were the ''core members'' of the German cell of the Islamic Jihad Union.

''We watched them for months, and as a result thwarted a serious bombing attack,'' she said during what took of the tone of a celebratory news conference in Karlsruhe. ''We discovered and prevented what would have been one of the most damaging attacks ever in Germany,'' she added. This is a good day for German security, but it has also shown that Germany is a target, not just a resting and plotting place for terrorists.''

The bomb materials were similar to those used in the July 7, 2005, attacks in London as well as the failed attacks on London and Glasgow this summer. Here, though, the plotters were using much more of them.

Police found what they called a wealth of bomb-making materials, information from computers and cash.

Rainer Griesbaum, the head of the federal prosecutor's anti-terrorism department, said authorities were still tracking down the group's financial backing. All three suspects were unemployed and on state benefits.

''They were full-time terror plotters,'' he said, adding that their targets included German sites associated with U.S. soldiers and citizens.

Said German terrorism expert Karl-Heinz Kamp of the Konrad Adenauer Foundation, a right-of-center research center in Berlin: ''The appearance of homegrown terrorists - people who lived inconspicuous lives and grew into terrorists - represents a new stage for Germany. It is encouraging to see how vigilant our authorities are.''