The 20-year old man was arrested at an address in Cardiff, Wales, early this morning under Section 41 of the UKs Terrorism Act.
He has been taken to a south London police station where he remains in custody, Scotland Yard said in a statement.
The arrests were carried out by officers from the Metropolitan Police's Counter-Terrorism Command, supported by colleagues from the Welsh Extremism and Counter Terrorism Unit (WECTU) and South Wales Police.
It was Britains fifth major militant attack so far this year.
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"So far, seven people have been arrested as part of the investigation being carried out by the Mets Counter-Terrorism Command; one person has been charged in relation to the attack, three people remain in police custody and three people have been released with no further action, the Met Police said.
Ahmed Hassan, believed to be of Middle Eastern origin, was the first suspect to be formally named by Scotland Yard last week as officers produced him before Westminster Magistrates Court in London on Friday.
The police had also revealed the explosive used by the prime suspect in the terror attack as triacetone triperoxide (TATP), similar to ingredients used in some of the previous terror attacks in Europe such Paris in November 2015.
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