A 12-year-old child dubbed 'The Kindergarten Bomber' has been arrested in Germany accused of plotting to blow up a Christmas market.

The boy, who has dual German-Iraqi citizenship, is the youngest ever to be seized in Europe for a suspected terror offence, but he cannot face criminal conviction because he is under 13.

The child was 'strongly radicalised' in recent weeks by a member of the Islamic State and planned to detonate his nail bomb on November 26 but it failed to explode, according to local sources.

A 12-year-old child dubbed 'The Kindergarten Bomber' has been arrested in Germany accused of plotting to blow up a Christmas market (file photo)

He or someone else had assembled a device made from gunpowder surrounded with nails and screws designed to cause maximum casualties when it went off, according to Focus Magazine.

He placed it in bushes near the to the Ludwigshafen Christmas market, but it failed to go off.

He tried again on December 5, this time placing it in different shrubbery near the city hall, according to Focus.

An eagle-eyed passer-by saw what he was doing and contacted police and the specialist explosive squad was brought in to carry out a controlled explosion.

A police vehicle stands in front of a residential building as an anti-terror operation is taking place in Germany

The boy, born in the city in 2004, was seized the same day and has been remanded in a juvenile detention centre where a team of youth workers have been assigned to care for him instead of facing trial.

He was handed over to the police by his parents the day after the second attempted bombing.

According to Focus - known in Germany for a magazine with close ties to and sources within the security services - the bomb was in a glass jam jar and the nails and screws were glued to the sides.

But police investigators determined that the explosive material used in the child's bomb been created out of the ingredients of fireworks and sparklers and was flammable but not explosive.

On Thursday, in a separate case, prosecutors said a Tunisian man suspected of planning an unspecified mission for ISIS was arrested.

Charfeddine T, 24, allegedly joined the terror group before he arrived in Germany in October 2015, the prosecutors' statement said.

They obtained an arrest warrant against him on Wednesday, accusing him of membership of a foreign terrorist organisation.

He had been in contact with an ISIS member in Syria responsible for running the group's operations abroad and had 'requested permission to carry out his mission'.

'Investigations so far have not confirmed whether it was to carry out an attack,' said the federal prosecutors.

The attempted slaughter illustrates the spiking terror threat in Germany.

Returnees from the ranks of Isis in the Middle East have told intelligence services that it is the group's main target in Europe.

Germany has been rocked by terror attacks this year, heaping pressure on chancellor Angela Merkel's open-door immigration policy.

A bloody week of violence that rocked Germany began on July 18 when Pakistani teenager Riaz Khan Ahmadzai, 17, posing as an Afghan refugee, hacked at passengers on a train in Wurzburg with an axe, wounding five.

He was shot dead by police.

Four days later mentally unstable German-Iranian teenager Ali Sonboly shot nine people dead during a rampage through a shopping centre in Munich before taking his own life.

Sonboly claimed he was taking revenge for being bullied at school with no political motive to the murderous rampage.

Germany has been rocked by terror attacks this year, heaping pressure on chancellor Angela Merkel's open-door immigration policy

In October, Police in have stormed 13 buildings across the country after reports ISIS terrorists were planning an imminent attack.

Anti-terror raids were launched on houses in Thuringia, Hamburg, North Rhine-Westphalia, Saxony and Bavaria as officers believed the threat was credible.

Armed police accompanied by sniffer dogs conducted the raids after being sent to look for weapons and explosives.

The operation came as part of an investigation into a 28-year-old Russian citizen of Chechen background suspected of intending to join the fighting in Syria on behalf of ISIS.

The investigation later developed into a probe of 13 further individuals, 10 men and three women, suspected of financing extremist activity.

Police said all were people of Chechen ethnicity with Russian citizenship seeking asylum in Germany, and whose status has not yet been decided.

Jaber al-Bakr, who planned a German bomb attack, has taken his own life while in custody

Earlier that month, a suspected ISIS airport bomb plotter hanged himself in a German prison after being arrested following a manhunt.

Syrian national Jaber al-Bakr, 22, was found hanged in his cell in Leipzig, eastern Germany on Wednesday evening - having reportedly used his own t-shirt - and was taken away overnight.

He was detained on Sunday after three days on the run following a tip-off that he may have been looking to team up with associates in Leipzig.

Al-Bakr had built 'a virtual bomb-making lab' in a flat in Chemnitz and was thought to have planned an attack against either one of Berlin's two airports or a transport hub in his home state of Saxony, security sources said.