London's Assistant Police Commissioner for Specialist Operations Mark Rowley said in a press conference overnight that the detained man was a Norwegian national of Somali origin, adding that an Australian was among those injured in the attack.
Armed police arrested the 19-year-old man at Russell Square after he attacked a woman in her 60s and who died from her injuries at the scene.
The suspected knifeman also injured up to five other people in the incident in Russell Square late on Wednesday night.
London Metropolitan Police Assistant Commissioner Mark Rowley told reporters: "Early indications suggest that mental health is a significant factor in this case and that is one major line of inquiry.
"But of course at this stage we should keep an open mind regarding motive and consequently terrorism as a motivation remains but one line of inquiry for us to explore."
Police began searching the home of the man for clues at 8.00am local time, SBS understands.
Police were called to Russell Square at 10.33pm after reports of a man seen in possession of a knife injuring people.
At 10.39pm a man was arrested and a Taser was discharged by one of the arresting officers, the Met said.
Extra police have been deployed in the area near the British Museum in Bloomsbury to provide reassurance.
The incident occurred in the same area as where one of the 7/7 bombs detonated in 2005. And it comes just hours after the Met unveiled more armed officers in the capital, The Daily Mail reports.
Paul Hutchinson, a taxi driver, told the publication he could see "loads of armed police, cars with lights on and the body on the floor".
"You drove past Russell Square and the road wasn't shut but the pavement was all taped off by police, lots of armed police, lots of cars and the body was just lying on the floor," he said.
"You could see the boots sticking out from under the cloth."
It is not known at this stage what condition the other persons injured in the incident are in or the nature of their injuries.
WATCH: More armed police set to protect London
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