The UK Parliament's influential Intelligence and Security Committee (ISC), which published its annual report, has warned of the "complications" of "children growing up inside the so- called 'Caliphate', educated and indoctrinated by Daesh [ISIS]".
"The reintegration of those who have spent their formative years in such an environment will present a serious challenge for the government and the agencies when they return to the UK," warns the committee made up of senior cross-party British MPs.
"We note that the dispersal of foreign fighters from Syria and Iraq raises serious questions as to when and where they will resurface, and with what intent," chairman Dominic Grieve said.
"There will also be a serious challenge to reintegrate children who have grown up in the so-called Caliphate," Grieve said.
UK home secretary Amber Rudd while giving evidence to the committee admitted this posed "absolutely a serious threat".
"Families coming back will be potentially having children who are going to be vulnerable, who are going to need protecting; but also potentially fighters themselves who could be a danger to society and could radicalise other people," she said.
Senior intelligence officials told the UK's national security oversight body that more than 850 British citizens of "national security concern are thought to have travelled to Syria, Iraq and the region".
"It is believed that around half of those have returned to the UK, more than 300 are thought to remain in Syria, and around 100 have been killed in fighting in the region," MI5, UK's counter-terrorism security service, told the ISC.
British Prime Minister Theresa May reacted to the report, saying she was determined to "do what is necessary to keep citizens safe".
"Sadly this year has shown that the threat from terrorism cannot always be contained. Too many innocent families' lives have been ruined across the UK from international terrorist attacks," she said, in reference to a string of ISIS-inspired terrorist attacks across the UK this year.
UK police and intelligence services recently revealed that they had succeeded in foiling at least nine terror plots this year. That number is believed to have hit 10 after a series of dawn anti-terror raids by armed officers yesterday to foil what is believed to be a Christmas terror plot.
British Police continue to question the four arrested men, aged between 22 and 41, after the raids in South Yorkshire and Derbyshire.