Prosecutors at the Momin Khawaja trial spent the first day describing a sinister plot they say would have caused widespread damage and death, in a case that's expected to be a crucial test of Canada's Anti-Terrorism Act.

Khawaja pleaded not guilty to all of the terrorism-related charges against him Monday, before Crown lawyer David McKercher gave his opening statement in the Ottawa court.

McKercher said a terrorist plot allegedly involving Khawaja would have caused "massive destruction and loss of life."

The plot was motivated by religious and political purposes, McKercher contended.

Khawaja is accused of helping in an international plot by a group of British Muslims of Pakistani descent to bomb U.K. targets in 2004. A London nightclub was among the group's alleged targets.

The Crown alleges that Khawaja was the British group's explosives expert. Prosecutors said investigators who raided Khawaja's home found an arsenal of weapons as well as an explosives detonator for a bomb he is accused of designing.

Among the seven charges against him, Khawaja is charged with helping to develop bomb detonators, possession of explosives, helping to finance terrorist activity, receiving terrorist training and facilitating terrorism.

Five men were convicted last year of involvement in the al Qaeda-inspired group's plan. However, Khawaja has not been charged with any crimes in the U.K.

On Monday, the Crown called its first key witness of the trial -- former al Qaeda member Mohamed Babar, who is now a police informant.

He testified that the arrest of one of the group's members foiled an alleged plot to kill Pakistan President Pervez Musharraf. Babar also said he was told to hide weapons and ammunition as part of the plan.

However, Babar did not link Khawaja to the group.

First test

Khawaja, 29, is the first Canadian to be charged under the federal Anti-Terrorism Act. He was arrested more than four years ago over alleged links to a British-based terror group.

"He came into the court between two armed guards and sat in the prisoner's dock behind bullet-proof glass," said CTV's Roger Smith, reporting from outside the court. "When he was asked to answer the charges he stood up and on all seven counts, he said seven times, 'Not guilty.'"

Heavy security is in place at the Ottawa courthouse. Police snipers kept watch when Khawaja arrived Monday morning, and strict security checks were in place for those attending the landmark terrorism trial.

The courtroom is protected by a floor-to-ceiling fence, spectators must pass through a metal detector to enter the court and metal barriers are erected outside the court.

The case is being seen as a key test for the Crown, the RCMP and CSIS, and their ability to implement the federal legislation which was created in the aftermath of the 9/11 terror bombings.

The trial could result in a maximum life sentence for Khawaja, a software developer.

Khawaja's lawyer Lawrence Greenspon has spent much of his time on the case mounting constitutional challenges to the Anti-Terrorism Act.

He also dismissed any apparent link between the Crown's case and evidence that Khawaja was found with weapons.

"The fact that he has guns and ammunition and propaganda in his home is now any part of the charges that he's facing," Greenspon told Â鶹´«Ã½net. "He's charged with terrorism offences, not for guns and ammunition possession."

Greenspon has received much of the Crown's evidence, but some evidence has been withheld on national security grounds.

The defence won a victory in 2006, when Justice Douglas Rutherford -- who will preside over the juryless trial -- struck down part of the law that defined terrorism as an offence motivated by religious, political or ideological consideration.

Rutherford ruled that the provision violated the Charter of Rights, but he severed the offending provisions from the rest of the law and did not strike down the entire act.

Greenspon said his client is nervous, but is looking forward to the results of the trial.

"I can tell you it's been a long time for him. He's been in custody for more than four years, it has certainly been difficult," Greenspon said.

"He's managed to cope with a situation he's completely unfamiliar with and I know he's looking forward, with anxiety, to the trial that is coming up."

Khawaja is a devout Muslim who was born in Canada to Pakistani parents.