The News of the World alleged that some members of the Pakistan team were involved in a scam in the fourth and final Test at Lord's.
"Following information received from the News of the World we have arrested a 35-year old man on suspicion of conspiracy to defraud bookmakers," a spokesman for London's Metropolitan Police told AFP.
News of the World, Britain's biggest-selling newspaper, alleged that two Pakistan bowlers delivered three blatant no-balls.
The weekly tabloid said it gave $230,000 to a middle man who correctly told them in advance precisely when the deliveries would be bowled.
The newspaper published images and dialogue from the encounter and a picture of what it said was one of the promised no-balls on Friday.
It also ran a photograph of Pakistan captain Salman Butt standing with the man they claimed was the middleman, and one of their reporters.
Pakistan's team manager Yawar Saeed told Sky News television the allegations were being investigated.
He was cited as saying that none of his players had been arrested and the Test would continue Sunday as planned.
The newspaper claimed they had posed as front men for an Asian gambling cartel, paying 10,000 pounds to the alleged fixer as an upfront deposit.
They met again on Wednesday in a west London hotel room to hand over the rest of the money as their "entry ticket" into what they claimed was a "huge betting syndicate".
They claimed the middle man then correctly predicted when the no-balls would be bowled.
Pakistan collapsed spectacularly yet again in the series as England closed in on an innings victory on Saturday.
At stumps, Pakistan, following-on, were 41 for four in their second innings, having been made to follow-on after they were dismissed for just 74 first time around.
That left them still 331 runs adrift of England's first innings 446 as the home team eyed a victory that would give them a 3-1 win in their last series before they begin the defence of the Ashes in Australia in November.
