A British man accused of plotting a terror attack may have targeted former prime minister Tony Blair and his wife Cherie, jurors in the partly-secret terror trial were told.

Erol Incedal, 26, from London, may also have been looking at a "Mumbai-style" atrocity with the use of Kalashnikov rifles, according to coded messages found on his computer, the Old Bailey heard.

But the alleged plot was scuppered after police stopped Incedal's car for a motoring offence and planted a bugging device which picked up snippets of chatter about "bin Laden, fatwa, Syria and jihad".

Incedal, formerly known in the case as AB, denies charges of preparing acts of terrorism and possessing a document entitled Bomb Making on a memory card.

Jurors were told his co-defendant, Mounir Rarmoul-Bouhadjar, also 26, from London, who was known as CD, has pleaded guilty to possessing a terrorist document.

Opening the case against Incedal, prosecutor Richard Whittam QC said: "You will hear that he was actively engaged with another or others who were abroad.

"The prosecution case is that such engagement was for an act, or acts of terrorism either against a limited number of individuals of significance or a more wide-ranging and indiscriminate attack such as the one in Mumbai in 2008."

When police first stopped Incedal's black Mercedes on September 30 2013, they found an Acer laptop computer, a notebook and a Versace glasses case which contained a scrap of paper with the Blairs's address written on it.

And in the notebook was written: "Oh you who believe. Fight those of the infidel who are near to you. Why do you not fight in Allah's cause for those oppressed men, women and children who cry out Lord, rescue us from this town."

Mr Whittam said: "Count 1 does not suggest that Erol Incedal had settled on a specific target or a particular methodology but in the context of the case as a whole and the evidence that I am going to come to, you may think that this address does have some significance."

During the search, police planted a bugging device in the car which picked up conversations that give a "flavour" of what was going on in the following weeks, Mr Whittam said.

In one, Incedal complains about the police and talks about going to a "Plan B" after being stopped.

He says: "I hate white people so much. I might have to destroy everything and do something else. These pigs, I just feel like running them over. They are pigs. Kaffar call them pigs."

In another chat, he says: "I made a big mistake. Some very important stuff was in the car. If they find it, we're f*****".

Jihadist music was played in the car to the words "slaughter, looking at the enemy, looking at the bodies. In this operation they kill approximately 100 kaffar...", the court heard.

There was also talk of renting an "illegal house" because "you cannot carry rucksacks - it's too dangerous," the court heard.

Armed police swooped on the car on October 13 last year as Incedal was driving and co-defendant Rarmoul-Bouhadjar in the passenger seat, Mr Whittam said.

Incedal was arrested on suspicion of being a terrorist and told to hand over the pin numbers for his two mobiles.

He gave his address as Unity Court in south east London but failed to mention that he also lived at another London address in Sussex Gardens.

Mr Whittam told the court that Incedal's phone contained various images of a synagogue and YouTube page in support of the Islamic State in Iraq.

The iPhone had internet searches in English and Arabic for the Islamic State in Iraq and had the black flag of Islam as a screensaver.

And inside the protective case of the iPhone was a micro SD card containing a bomb making document, the court heard.

During the search of the Sussex Gardens address near Paddington, police recovered the laptop which had been in the car during the first police stop.

On it, they found Skype messages and emails. In one, there was a reference to "K 1122aaa shhh" and "mo88m ssbayy style" taken to refer to "the use of Kalashnikov for an attack like they used in Mumbai in 2008", the court heard.

In the search of the Unity Place home, police found hand-written notes on A4 pads with reference to "security", "use law as cover", "finances" and "secure communications".

Some pages appeared to refer to a "Plan A" check list - one-month surveillance, rent flat nearby, uniform, and training, the court heard.

After lunch, the trial continued in secret with a small group of journalists allowed to attend but not to report on the proceedings. The trial is expected to go on for four to six weeks.