By Mark Hosenball and Guy Faulconbridge

WASHINGTON/LONDON (Reuters) - British and U.S. spies intercepted "chatter" from suspected militants and at least one other government suggesting that a bomb, possibly hidden in luggage in the hold, downed a Russian airliner on Saturday, killing all 224 people on board, Western intelligence sources said.

Prime Minister David Cameron halted flights to and from Sharm al-Sheikh on Wednesday after intelligence shown to him indicated that it was likely that the Airbus A321 heading towards St Petersburg was brought down by a bomb.

Britain says there was a "credible threat" but has refused to comment further on the intelligence involved, citing long-standing rules about disclosing operational details about live investigations.

Western intelligence sources said some of the assessment about the bomb came from intercepted communications both from suspected militants and from one or more governments involved in the investigation.

The intelligence sources, who spoke on condition of anonymity due to the sensitivity of the situation, said the evidence was not categorical and that there is still no hard forensic or scientific evidence to support the bomb theory.

"We still cannot be categorical but there is a distinct and credible possibility that there was a bomb," one source said.

Two sources with knowledge of the matter said the bomb may have been hidden in luggage in the hold of the Russian plane. They refused to give any further information.

A Sinai-based group affiliated with Islamic State, the militants who have seized swathes of Iraq and Syria, has claimed responsibility for the crash, which, if confirmed, would make it the jihadist organisation's first attack on civil aviation.

“The theory of an explosive device, with local complicity, is being taken seriously. Nothing is proven yet, but it is a real possibility,” a European official said after being briefed by a Western intelligence agency.

"They believe that what Daesh (Islamic State) is saying has a good chance of being credible."

"CHATTER"

A U.S. government source said some of the "chatter" intercepted about the bomb included conflicting details about where on the plane the suspected bomb was placed.

Russia, which was initially critical of Britain's assessment of what it has called a crash, on Friday suspended all flights to Egypt.

President Vladimir Putin ordered the halt to flights after Alexander Bortnikov, the head of Russia's FSB security service, recommended that Russia suspend all passenger flights to Egypt until it knew exactly what caused the crash.

"Until we know the real reasons for what happened, I consider it expedient to stop Russian flights to Egypt," said Bortnikov. "Above all, this concerns tourist routes."

Cameron's spokesman declined to be drawn on details.

"The evidence we received suggested there was a credible threat with regard to Sharm al-Sheikh airport which is why we have taken the actions we have."

"I am not going to get into discussions on security matters. I am not going to speculate on the intelligence."

(Additional reporting by John Irish in Paris; Editing by Tim Ahmann and Giles Elgood)