Airport security around the world was tightened after the 2009 underwear bomb attempt
Reports from the US say the would-be suicide attacker in a foiled "underwear bomb" plot was in fact a double agent.
US officials are quoted as saying that the person dispatched by Yemen-based al-Qaeda to attack a US-bound plane had infiltrated the group.
In an apparent intelligence coup, the agent left Yemen with the device and delivered it to the CIA.
Meanwhile, the Pentagon says it is sending military trainers back to Yemen to help counter al-Qaeda militants.
US intelligence learned last month that militants with al-Qaeda in the Arabian Peninsula (AQAP) in Yemen planned to attack a plane with a more sophisticated version of a bomb hidden in a passenger's underwear, similar to one used in a failed 2009 attempt, Associated Press news agency reported.
Officials told US media that the would-be bomber had been recruited by Saudi Arabia's intelligence agency and sent to Yemen where he infiltrated the militants' cell.
The BBC's Steve Kingstone in Washington says the double-agent was reportedly given an ambitious task by Saudi intelligence - to convince AQAP that he wanted to blow up himself and a US-bound aircraft.
The agent was given the device which he then delivered to the CIA and Saudi officials.
The New York Times reports that the double-agent is now safe in Saudi Arabia.
FBI analysts are studying the device.
The upgraded underwear bomb is described by officials as a "custom-fit" device, that would have been difficult to detect even with careful security checks.
It is said to have two forms of detonator, unlike a similar bomb, from the same Yemeni source, that failed to explode on Christmas Day 2009.
The main charge was a high-grade military explosive that "undoubtedly would have brought down an aircraft", an official told the New York Times.
Experts quoted in the US media say both bombs bear the hallmarks of AQAP master bomb-maker Ibrahim Hassan Tali al-Asiri.
"The plot itself indicates that the terrorists keep trying... to devise more and more perverse and terrible ways to kill innocent people," US Secretary of State Hillary Clinton said during a visit to India.
The agent also provided intelligence that led the CIA to conduct a drone strike in Yemen on Sunday that killed AQAP leader Fahd al-Quso, the New York Times reported.
Quso was wanted in connection with the bombing of the American destroyer USS Cole in Yemen 12 years ago. The US was offering a $5m (£3.1m) reward for information leading to his capture or death.
US officials told ABC News that Quso had been planning an attack similar to the failed 2009 attempt to blow up a passenger plane.
The device seized from Yemen shares some features with the bomb sewn into the underwear of would-be suicide bomber Umar Farouk Abdulmutallab during that attempt, officials said.
The Nigerian was arrested when his device failed to explode fully while on a plane bound for Detroit.
Meanwhile, Pentagon spokesman Capt John Kirby told reporters on Tuesday that the US had "begun to reintroduce small numbers of trainers into Yemen".
"We have been working with the government of Yemen and the Yemeni military for some time now to help them deal with the growing threat of al-Qaeda in Yemen," he added.
Capt Kirby would not say how many trainers were involved or where they were based.
Months of political upheaval in Yemen have left militants in control of large parts of the south of the country.
Washington's military training programme in Yemen was suspended in 2011 after then-President Ali Abdullah Saleh was badly injured in a rocket attack.
President Saleh gave way to his deputy, Abed Rabbo Mansour Hadi, in February after more than a year of mass pro-democracy protests and bouts of open warfare between rival groups.