Majid Muhamad, from Iraq, is accused of assisting people linked to the terror cell, Ansar Al Islam, enter Europe, including supplying them with fake passports and accommodation, La Repubblica reported.
Officers from Digos, Italy's anti-terror squad, intercepted phones calls Muhamad had with contacts in Norway, during which they were allegedly overheard planning attacks in Europe.
He is also suspected of being linked to the members of Ansar Al Islam, a terror cell founded by Najmuddin Ahmad Faraj, also known as Mullah Kreka, who were arrested across Europe in November. Six were arrested in Italy, four in Britain and three in Norway on suspicion of trying to spring Kreka out of detention in Norway.
Muhamad was released from an Italian prison in 2013 after serving ten years on international terrorism charges.
He won an appeal against a deportation ruling, after which he “established himself in the local fabric” of Bari, getting an apartment and setting up a kebab shop, La Repubblica reported.
Italy's anti-terrorism sweep has widened since the November 13th Paris attacks, with four suspected terrorists arrested last week in Italy and Kosovo.
A week earlier four Moroccans, suspected of spreading extremist views, were deported.