A British soldier, who became an Islamic extremist, has been arrested over claims of fraud and false misrepresentation after he allegedly collected donations in the name of foreign war victims.

Abu Jibreel, 39, formerly known as Paul Steven, was arrested in Leyton in East London, the Sun has reported.

During an interrogation, it emerged that he used to carry a fake ID card to collect donation, saying it was for the peoples in the civil-war torn regions of Somalia and Libya. He is accused of stealing donation money.

Jibreel was born in Cheshire and was a one-time member of the banned Muslim Against Crusades group and a companion of hate preacher Anjem Choudary. He was an ex-Irish Guard (between 1988 - 997), who embraced Islam after having a drunken conversation with a Muslim cab driver.

According to the Sun, Jibreel wants to Islamise Britain with Sharia law.

"I used to have a pint when I was in the Army - but I don't think it's excessive to lash drinkers," he was quoted as saying by the Sun.

"If the accusations are proved against him, he will also be guilty of gross hypocrisy," said a source.

Jibreel has been released on bail until February.