The convergence of the two threats comes as Britain is already on "severe" alert, meaning security officials believe an attack is highly likely.

Bankers are being warned to dress casually to deflect populist anger and luxury hotels are securing their perimeters.

Concern is particularly high because the last major summit in Britain - the G8 meeting in July 2005 at Gleneagles - was marked by suicide attacks on London's transit network that killed 52 people.

"We will be challenged. We will be stretched," said Simon O'Brien, a police commander responsible for the 7.2 million ($18 million) operation to secure the city.

Tens of thousands of demonstrators plan four days of protests at sites across London, threatening to overwhelm police and potentially leave the capital more vulnerable.

The Home Secretary, Jacqui Smith, said that while no specific plot against the G20 summit had been identified, terrorists could strike "without warning at any time".

Michael Clarke, head of the Royal United Services Institute think-tank, said small terrorist groups might use the cover of protests by environmentalists, antiwar activists and unions to mount an attack.

"The protests will cause uncertainty and chaos, and if they turn violent could complicate the lives of those police and security service staff who are looking for terrorists," said Clarke, who sits on the Government's National Security Forum advisory panel.

Police arrested five people in Plymouth yesterday under terrorism laws and recovered replica weapons, fireworks and activist material. Officers are investigating whether they planned to target the summit.

The investigation was sparked after a 25-year-old man was charged with spraying graffiti on a wall in Plymouth city centre, prompting officers to search his flat. They discovered a replica Kalashnikov assault rifle and several minor explosive devices made from fireworks.

About 5000 police - some armed with Tasers - will guard London, and an extra 35,000 will be on standby for the summit tomorrow night NZT. Some will be at the summit venue in London's Docklands, with others protecting posh hotels and the sleek glass towers of the financial district.

In the light of November's seaborne attack on Mumbai, India's financial centre, extra patrol boats will guard the Thames, and police frogmen will scour the river for floating bombs.

Police will tap London's network of 10,000 CCTV cameras to monitor protests, while an Army special forces unit will be on alert to respond.

Pepe Egger, a senior security analyst at Exclusive Analysis Ltd, said banks and hotels had prepared for attempted raids or sieges.

Unlike previous summits, most protests in London would be away from the actual meeting venue at the ExCel centre, he said.

"The interesting thing is that the protesters are unlikely to target the G20 delegates, their anger is not directed at the G20 itself. They will target the banks and financial district."

Anger at bankers is high in both Britain and the United States, where some of the bailout money for stricken banks was spent on staff bonuses.

Banks have told staff to dress in casual clothes today and tomorrow, to forgo cigarette breaks outside and cancel all but their most critical meetings.

"I'm pretty worried," said Luke Keyser, a 28-year-old at the Royal Bank of Scotland. "We've already been told to dress down. If we want to, we can work from home."

People living near the G20 venue in Canning Town have been advised to carry photo IDs to ensure they can pass through police roadblocks and get home.

- AP, INDEPENDENT