The man is in police custody in south London after the car he was driving plowed through a group of cyclists and pedestrians before smashing into security barriers guarding access to the Houses of Parliament at 07:37 BST in Westminster.
The silver Ford Fiesta crashed into security barriers outside the Houses of Parliament leaving one woman in hospital with what's been described by Assistant Commissioner Neil Basu as "serious but thankfully not life threatening injuries."
"The man, who is in his late 20's, was arrested on suspicion of terrorism offenses and has been taken to a south London police station where he remains in custody," Assistant Commissioner Neil Basu said in a statement, "he hasn't been formally identified, he is not co-operating," he added.
Footage taken by Euronews journalist Vincent McAviney emerged on social media of the moment the suspect was arrested by armed officers already in the area.
"Given that this appears to be a deliberate act, the method and this being an iconic site, we are treating is as a terrorism incident and the investigation is being led by officers from the Counter Terrorism Command," Assistant Commissioner Neil Basu said.
Scotland Yard is still trying to establish his identity and motivation for crashing into a security barrier in Westminster.
Assistant Commissioner Neil Basu also thanked the public for "their patience and understanding" while the area around Westminster remained a crime scene.
Britain's Prime Minister Theresa May tweeted "My thoughts are with those injured in the incident in Westminster and my thanks to the emergency services for their immediate and courageous response."
Leader of the Labour Party, Jeremy Corbyn tweeted "My thoughts are with those injured outside Parliament this morning in what is being treated as a terrorist incident."
"All Londoners, like me, utterly condemn all acts of terrorism on our city," London's Mayor Sadiq Khan said on Twitter.
An emergency government Cobra meeting is being chaired by Britain's Prime Minister Theresa May following the crash.
READ MORE: Terror Related Incident in Central London — What We Know So Far