Steven Bishop, 41, admitted to purchasing fireworks and obtaining instructions on how to make explosives.
Bishop, of Thornton Heath, was believed to have been targeting “Morden Mosque” when his home was raided by police on 29 October 2018.
He will be sentenced tomorrow after changing his plea on the opening day of his trial at Kingston Crown Court on Monday.
He had initially been charged with preparing an act of terrorism, but prosecutors accepted a plea to a charge of possession of an explosive substance with intent to endanger life or property yesterday.
Bishop previously pleaded guilty to possessing information likely to be useful to someone preparing an act of terrorism – a handwritten note on how to make explosives.
When he was arrested he told police officers that he wanted revenge for the death of Saffie Roussos, 8, who was killed in the Manchester Arena attack in 2017.
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The court heard that Bishop has a history of mental health issues and numerous psychiatric reports had been prepared ahead of his trial.
He is remanded until Wednesday.