July 7 (Bloomberg) -- Authorities in the U.S. and overseas foiled a plot to attack the New York City transportation system, and a 31-year-old Lebanese man who described himself as a ``mastermind'' of the plan has been arrested, the FBI said.

Eight people, none of them Americans, have been identified as being involved in the plot, including Assem Hammoud, who has been charged by authorities in Lebanon, said Mark Mershon, assistant director-in-charge of the Federal Bureau of Investigation's New York office. Two other people have been taken into custody.

The year-old plan, being investigated by seven governments, involved ``martyrdom, explosives and some of the tubes that connect New Jersey to Manhattan,'' Mershon said during a briefing in New York City today. The plot specifically mentioned the tunnels that carry the trains of the Port Authority of New York and New Jersey under the Hudson River, he said.

``The planning or the plotting for this attack had matured to the point where it appeared the individuals were about to go to a phase where they would attempt to surveil targets, establish a regimen of attack and acquire the resources necessary to effectuate the attacks,'' Mershon said. ``At that point, I think it's entirely appropriate to take it down.''

Hammoud had pledged allegiance to the terrorist group al- Qaeda and leader Osama bin Laden, and had planned to carry out the attack in October or November of this year, Mershon said. The eight suspects are on three unspecified continents; none had been in the U.S.

The plot was disclosed a day after the Homeland Security Department announced it was awarding New York $47 million in transit security money for fiscal year 2006, which ends Sept. 30. That compares with $38 million last year.

More Money Sought

Lawmakers from the region said the foiled plot shows intelligence services are working, yet said the plan demonstrates that the city needs more terrorism funding.

``This is one instance where intelligence was on top of its game and discovered the plot when it was just in the talking phase,'' Democratic Senator Charles Schumer of New York said. ``But it once again illustrates how misguided Homeland Security's allocation of funds is. How many warnings does the department need about threats to New York until it changes its formula?''

The New York Daily News earlier today reported that U.S. authorities uncovered a plot by a group possibly linked to slain al-Qaeda leader Abu Musab al-Zarqawi to bomb New York's Holland Tunnel and flood the city's financial district.

The Holland Tunnel was not identified as part of this plot, said Mershon, who declined to comment on questions about specific details of the planned attacks.

Leaker Chastised

Authorities said they hadn't intended to release details about the plot this early and that whoever leaked information to the Daily News had compromised the FBI's relationship with some foreign intelligence services.

The person who leaked the details is ``clearly someone who doesn't understand the fragility of international relations,'' Mershon said. `We've had a number of uncomfortable questions and some upsetment with these foreign intelligence services that had been working with us on a daily basis.''

Some unidentified counterterrorism officials questioned the seriousness of the threat to New York City, saying that the tunnels are below ground -- making flooding unlikely -- and protected by bedrock, concrete and steel, the Daily News said.

``Any explosion, any blast in any tunnel, regardless of the size, would cause an issue obviously and a disruption,'' said Sam Plumeri, superintendent of the police for the Port Authority of New York and New Jersey.

Disclosure of the bomb plot coincided with the one-year anniversary of a terrorist bomb attack on London subways and a bus that killed 52 and injured about 700.

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net; Henry Goldman in New York at hgoldman@bloomberg.net.

Last Updated: July 7, 2006 15:56 EDT