The arrested men, who claimed to be students, included an Arab national who was picked from PunjabUniversity hostel last week.
While investigators earlier suspected that they were part of the Pakistani Taliban, sleuths said their connections to Al Qaeda have been established.
The arrested men had completed special jihadi training in North Waziristan tribal region and are said to be experts in information technology, communications and making improvised explosive devices.
Police have also arrested two shopkeepers from an electronic market in Lahore who allegedly provided electronic gadgets for use in suicide attacks.
It is believed that several of the detained men are foreigners.
Seven suicide jackets, guns, scores of bullets, CDs, computers, maps of important facilities and explosives were recovered from their possession.
Meanwhile, local media reports said investigators had unearthed a workshop where members of the squad would test their instruments.
While their handler lived in PunjabUniversity hostel, the remaining members lived in different urban areas in Lahore. The arrest of the handler was made after another squad member, who often visited the hostel, met him to give updates and seek more instructions.
Sources said the squad members had succeeded in preparing an explosive-laden vehicle for a suicide attack that is still present in Lahore at an unidentified location with a fake licence plate.
Though the vehicle poses a potential threat to citizens, it is yet to be traced by law enforcement agencies, The Express Tribune reported.
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