The controversy erupted after the News of the World alleged some members of the Pakistan team were involved in a betting scam in the ongoing fourth and final Test against England at Lord's.
Britain's biggest-selling newspaper claimed several blatant no-balls had been delivered by Pakistan bowlers.
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The weekly tabloid said it gave $230,000 to a middle man who correctly told them in advance precisely when those deliveries would be bowled.
"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.
Despite the latest controversy swirling around the game, the International Cricket Council (ICC) insisted the fourth Test would continue as scheduled on Sunday, adding that no "players nor team officials have been arrested in relation to this incident".
Pakistan 'aware' of allegations
Pakistan tour manager Yawar Saeed added: "I can confirm we are aware of the allegations. Scotland Yard (Metropolitan) police are with us now at our hotel and we are helping them with their enquiries.
"This is as much as I can say at the moment."
The News of the World published images and dialogue from the encounter and a picture of what it said was one of the promised no-balls delivered 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.
At the team's London hotel, fast bowler Mohammad Asif told the Press Association: "I have spoken to the management and they have told us something happened, but not what.
Cricketers focused on this week's match
"The management will tell us more later. We are 100 percent focused on the match tomorrow."
The News of the World claimed their reporters 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.
The newspaper showed the alleged fixer with piles of cash on a table.
Next Test to continue
Meanwhile, the ICC said the match would continue as planned on Sunday at Lord's, the spiritual home of the game.
"The International Cricket Council, the England and Wales Cricket Board (ECB) and the Pakistan Cricket Board (PCB) have been informed by the Metropolitan Police that a 35-year-old man has been arrested on suspicion of conspiracy to defraud bookmakers," said an ICC statement.
"The Metropolitan Police have informed the ICC, ECB and PCB that their investigations continue and ICC, ECB and PCB, with the involvement of the ICC Anti Corruption and Security Unit, are fully assisting those enquiries.
"No players nor team officials have been arrested in relation to this incident and the fourth Test match will continue as scheduled on Sunday.
"As this is now subject to a police investigation neither ICC, ECB, PCB nor the ground authority, MCC (Marylebone Cricket Club), will make any further comment," it added.
England downs Pakistan in Test
Pakistan, who have been dogged by 'fixing' allegations since the 1990s, collapsed spectacularly yet again Saturday to leave England closing in on an innings victory.
At stumps, Pakistan, following on, were 41 for four in their second innings, having been 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 final series before they begin the defence of the Ashes in Australia in November.
There was also a controversial finish to Pakistan's 2006 Test series in England.
They forfeited the final match at The Oval in south London, having refused to take the field after tea on the fourth day because they'd been penalised for ball-tampering.
Pakistan have been unable to play matches at home since an armed attack on the Sri Lanka team bus in Lahore in March last year effectively turned the country into a 'no-go area' for international cricket.
