The two commercial airline pilots, one of whom was flying for an airline on an intelligence service watchlist, were intercepted talking about the plot and the information passed on to Britain's spies at the Government Communications Headquarters (GCHQ).
The intercept took place in the week after the Paris terror attacks last November, the Sunday Express reported.
Although they used coded messages from the cockpits of their passenger jets, GCHQ used the Arabic transcripts to established they were talking about attacks on London, Bath, Brighton and Ipswich.
"The areas we believed these attacks might take place were given extra surveillance. Troops were on several hours notice to deploy as part of Operation Templer," a senior intelligence source was quoted as saying by the newspaper.
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"Alarm bells rang after several communications in code involving overseas airline pilots were picked up by chance. We can only assume that they considered it safer to use this frequency than other modes of communication".
The conversation was intercepted by Royal Air Force (RAF) operators based at the National Air Traffic Services (NATS) Control Centre in Hampshire, on the southern coast of England.
The pilots, who were unknown to the authorities but believed to be sympathetic to Islamic State (ISIS), were using the emergency "Mayday" channel in the belief they were not being monitored.
They coded their language with musical references, often referring to "hits".
It is thought the pilots were preparing to smuggle in explosive devices or chemical weapons. The messages were intercepted as they flew from a European airport, thought to be Schiphol, in Amsterdam, to Middle Eastern destinations.
It is not known where they are now but their identities are known to security services and it is understood they are now high-profile, watchlist targets.