Haringey Council placed the child with relatives of Abdulla Ahmed Ali, who led the plot to kill thousands with liquid bombs, London’s Evening Standard reported.
The council confirmed a child was living with the family before officials were aware of “any terrorist activity” among a relative.
The newspaper reported the child was still with the family in the house in Walthamstow at the time of Ali’s arrest in August 2006.
A council spokesman said the child was removed “immediately” after police moved in, and said the family no longer fosters children for the council.
He said: “The placement here was made after checks and before anyone was made aware of any terrorist activity in the extended family network.
“The child was moved immediately when the police were in touch and arrests were made in 2006. The family no longer fosters for Haringey.”
Ali, 28, and two other men, Assad Sarwar and Tanvir Hussain were last week found guilty of conspiracy to murder on a massive scale.
Prosecutors said they engaged in a “calculated and sophisticated plot to create a terrorist event of global proportions”.
The revelations will raise questions about checks carried out on the family before the child was placed with them.
Haringey’s social services came in for severe criticism in the wake of the Baby Peter case.
In December, a report commissioned by the Government found the council’s child protection services “inadequate”.
The council’s leader and cabinet member for children and young people resigned, and its head of children’s services Sharon Shoesmith was sacked, along with a social worker and three managers.
Shadow children’s secretary Michael Gove expressed fears that the council would not learn lessons from today’s revelations.
“It’s truly frightening to think that the social services department of this council placed a child with a terrorist, and even more so to think that the child could have been used as part of the foil for the bomb plot,” he said.
“Haringey council needs to make public exactly what vetting procedures it has in place to ensure that this can never happen again.
“As with the Baby Peter tragedy, there has been far too much secrecy, which raises the concern that lessons will not be learnt.”
Metropolitan Police photo of Abdulla Ahmed Ali
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