The man initially held on suspicion of grievous bodily harm and assault on police has now been re-arrested under the UK's Terrorism Act 2000, the Metropolitan Police said today.
"A car deliberately drove at a police van and stopped in front of it in a restricted area on Constitution Hill near Buckingham Palace. The officers, who were unarmed police constables and from Westminster borough, got out of the van and approached the car, a blue Toyota Prius," the police said.
"The incident is being treated as terrorism but we will remain open minded while the investigation continues."
During a struggle, three officers sustained injuries. The man, who repeatedly shouted Allahu Akbar, was incapacitated with tear gas.
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Two of the officers were taken by ambulance to hospital with minor cuts and discharged a short time later. The third officer did not require hospital treatment.
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.
Commander Dean Haydon, the head of the Met's Counter Terrorism Command, said officers from the Counter-Terrorism Command are now investigating and searches are being carried out in the Luton area today.
"We believe the man (from Luton in the east of England) was acting alone and we are not looking for other suspects at this stage. While we cannot speculate on what the man was intending to do - this will be determined during the course of the investigation - it is only right that we investigate this as a terrorist incident at this time."
Earlier, police had revealed details of the attack which took place at around 20:35 hrs (local time) last evening when a man stopped his blue Toyota Prius car in a restricted area near a police vehicle.
The area was surrounded immediately by armed police and other security services and tourists were ushered away from the area. Eyewitnesses have reported seeing a sword-like weapon in the suspect's car.
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.
A Palace spokesperson said the summer opening hours and tours of the Queen's London residence will go ahead on schedule, adding that it will be "business as usual".
Europe is on high alert following a spate of recent terror attacks.
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.
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. He then ran into the grounds of the Parliament, where he fatally stabbed an unarmed police officer. He was shot dead by an officer.
A concert by pop star Ariana Grande in Manchester was attacked by a suicide bomber who detonated a shrapnel-laden homemade bomb at the entrance to the concert, leaving 23 dead.
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