She is also held responsible for previous outrages as one of the most fanatical leaders of the murderous al-Shabaab terror group.
Security sources said the body of a white woman dressed in Muslim clothing was found in the mall, but a police chief said it was not Lewthwaite as all the attackers were men.
Witnesses who fled the bloodbath said a white woman appeared to be in command of the group of terrorists who gunned down dozens of people in the Westgate Mall and held others hostage for three days. They said she had shouted orders in Arabic to the rest of the gunmen.
She has attained near-mythical status among Islamist terrorists as she has managed to evade capture and allegedly organise attacks in east Africa.
Lewthwaite is being hunted by the SAS in Africa and the Kenyan forces are believed to be authorised to shoot her on sight.
Twitter claims from the al Shabaab terror group claimed that Lewthwaite masterminded the attack and was in the centre during the massacre.
Last night it claimed it was not her and she was alive and "safe".
Police and soldiers were still clearing the complex last night with some of the remaining attackers believed to be in hiding in the shopping mall.
Lewthwaite was born and spent some of her childhood in Banbridge, before moving to England.
Her father was a soldier sent here during the Troubles who married a local woman.
She converted to Islam as a teenager and married Jermaine Lindsay, one of the 7/7 bombers.
She then married another jihadist while on the run in Africa where she allegedly became leader of the al-Shabaab terror grouping.
Ruthless Lewthwaite later allegedly arranged the assassination of a terror rival in an attack that also claimed the life of her second husband, Habib Ghani.
She did not even acknowledge the fact he had died.
A Foreign Office spokeswoman told the Belfast Telegraph last night it was too early to speculate whether Lewthwaite was involved in the massacre and was dead.
Earlier a spokesman for the Foreign Office had said: "We are aware of the reports and we are looking into them.
"It is really difficult to substantiate. We are looking at the names and seeing what we can find out."
Six British citizens died in the attack, with some of the gunmen also believed to be radicalised Muslims from Britain.
Almost 200 people were also wounded in the attack and Kenyan authorities say they fear the death toll will rise.
Family friends in Banbridge yesterday said the publicity surrounding Lewthwaite in recent years had deeply affected her grandmother who lives near the town centre.
Elizabeth Allen is said to be devastated by the revelations regarding her granddaughter.
It is understood the stress on Ms Allen, who is in her late 80s, is such she was hospitalised.
The frail pensioner previously told how she was issued with a panic alarm with which she was to contact police if Lewthwaite ever made contact with her.
"I've been told by Special Branch to contact them immediately if anything happens. I've just got to beep this here," she said previously, pointing to the alarm on string around her neck.
A family friend said she was unaware of any other relatives of Lewthwaite's in Northern Ireland.
Her mother Christine is believed to have moved to England.
Ulster Unionist councillor Joan Baird knows the family personally. She said they had been distraught by the allegations surrounding Lewthwaite.
"It's distressing for all the family and very distressing for the people of Banbridge," she said.
"She came from a very good family and they have suffered enough as a result of all this."
Last year, Lewthwaite's father said he could not believe his daughter was linked to terrorist activities.
"I cannot believe she would be involved in something like this and be there with the children," said Andrew Lewthwaite.
"We have not had any contact with her for some time. I haven't spoken to her for a long time."
COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? email@example.com