Sniper's bullet kills six Taliban
The 20-year-old marksman, a lance corporal in the Coldstream Guards, hit the trigger switch of the device from 930 yards away, causing the bomb to explode.
The blast killed the would-be bomber and five men around him, an MOD spokesman said.
Lt Col Richard Slack, commanding officer of 9/12 Royal Lancers, told The Daily Telegraph the unnamed shooter also prevented another major attack as a second suicide vest packed with explosives was found nearby.
"The guy was wearing a vest. He was identified by the sniper moving down a tree line and coming up over a ditch," he said.
"He had a shawl on. It rose up and the sniper saw he had a machine gun.
"They were in contact and he was moving to a firing position. The sniper engaged him and the guy exploded. There was a pause on the radio and the sniper said, 'I think I've just shot a suicide bomber'. The rest of them were killed in the blast."