Police believe a man deliberately drove a car into pedestrians and cyclists before ramming it into barriers outside the UK parliament in what appeared to be the second terrorism attack on the building in just under 18 months.
Three people were injured after the vehicle was driven through a group of cyclists and pedestrians during the early morning rush hour before smashing into a protective barrier on a lane used for accessing parliament.
The driver, a man in his 20s, was arrested by armed officers at the scene moments later.
"Given that this appears to be a deliberate act, the method, and this being an iconic site, we are treating it as a terrorist incident," London Assistant Commissioner Neil Basu said.
In March 2017, Khalid Masood, 52, killed four people on nearby Westminster Bridge and stabbed to death an unarmed police officer in the grounds of parliament before being shot dead.
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It was the first of five attacks on Britain last year which police blamed on terrorism.
Basu said the suspect in Tuesday's incident was in custody but was not co-operating with detectives.
Although he had not been formally identified, the man was not believed to be known to security forces, Basu added.
"At this early stage of the investigation, no other suspects at the scene have been identified or reported to police," he said. "There is no intelligence of further danger to Londoners or the rest of the UK in connection with this incident."
Police said a silver Ford Fiesta had collided with a number of cyclists and pedestrians before crashing into barriers outside the Houses of Parliament at 1637 (AEST).
No other weapons had been found, Basu said.
Camera footage showed the vehicle taking a wrong turn into a group of cyclists waiting at traffic lights before veering across the road and into a lane leading to parliament before hitting the barrier as two police officers jumped to safety.
Two people were taken to hospital and one woman was still receiving treatment for serious but not life-threatening injuries.
Armed officers swarmed the scene and cordoned off a large area around the parliament building in central London, usually bustling with tourists and government workers.
"I saw the cyclists, injured cyclists. I don't know if he's hit these people, or if they've just dived to escape," witness Jason Williams told reporters. "It didn't swerve, there was not another car going behind him. It looked like it was planned."
Images shot by a Euronews journalist showed police pointing their guns at the vehicle shortly after the crash. Footage on social media showed a handcuffed man being led away by heavily armed police.
British Prime Minister Theresa May, who like other MPs is on holiday during parliament's summer recess, said her thoughts were with the people injured. Government security officials were due to hold a meeting of their emergency committee later on Tuesday to discuss the incident.
"All Londoners, like me, utterly condemn all acts of terrorism on our city," London's Mayor Sadiq Khan said on Twitter.
Westminster Underground station, close to parliament, was closed to the public and the building cordoned off.
Britain is on its second-highest threat level of "severe", meaning an attack is considered highly likely and the authorities say a dozen Islamist plots had been foiled since Masood's attack in Westminster last year.
Last week, a Muslim convert admitted plotting to kill more than 100 people by driving a truck into pedestrians on London's Oxford Street, the capital's major shopping thoroughfare.
In October last year, 11 people were injured when a car collided with pedestrians near London's Natural History Museum, raising fears of an attack, but police later said the incident was a road traffic accident.
