A 26-year-old man initially held on suspicion of grievous bodily harm (GBH) and assault on police has now been re- arrested under the UK's Terrorism Act 2000, the Metropolitan Police said on Saturday.
"At approximately 20:35hrs a man stopped his car in a restricted area near a police vehicle on the Mall roundabout near Spur Road, SW1A. Officers at the Mall spotted a large bladed weapon in his vehicle and went to arrest him. During the course of detaining the man, two male police officers suffered minor injuries to their arm," the Met Police said.
The suspect was taken to a London hospital for treatment of minor injuries and has now been taken to a central London police station for questioning.
"No members of the public at the scene are believed had any interaction with the arrested man. There are no other reported injuries," the Met Police said.
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Queen Elizabeth II and other members of the royal family were not in Buckingham Palace at the time.
The 91-year-old monarch is at Balmoral Castle in Scotland and other senior members of the royal family are also away during the summer holiday season in the UK.
Eyewitnesses have reported seeing a sword in the suspect's car.
"My partner saw a sword, which I didn't see, as well as a policeman with blood on him, looking like his hand or chest was injured. The police officer had it in his hand, walking away with it," an eyewitness said.
The man had stopped his car in a "restricted area" when police saw the weapon.
The area was surrounded immediately by armed police and other security services and tourists were ushered away from the area.
A terror cell launched an attack on Barcelona's famous Las Ramblas street last Wednesday, and at a nearby seaside town, leaving 14 people dead.
On Saturday night in Brussels, a man armed with a machete attacked a group of soldiers.
He was shot dead at the scene, while two soldiers were not seriously injured.
Britain has also been the scene of a series of terror attacks this year alone.
In March, a terrorist drove a car into pedestrians on Westminster Bridge in London, killing four people.
Khalid Masood then ran into the grounds of the Parliament, where he fatally stabbed an unarmed police officer.
A concert by pop star Ariana Grande in Manchester was attacked by a terrorist in May.
Suicide bomber Salman Ramadan Abedi detonated a shrapnel-laden homemade bomb at the entrance to the concert, leaving 23 dead and 250 injured.
In June, three terrorists in a van drove into pedestrians on London Bridge and then ran to Borough Market, where they stabbed people.
Eight people were killed and the three terrorists were shot dead by police.