Britain raised its threat level to maximum on Friday and announced troops would be deployed to key sites after a bomb detonated on a packed London Underground train, injuring at least 29 people.
The improvised explosive device (IED) explosion on a packed train was the fifth terrorist attack on Britain in six months. Prime Minister Theresa May said it was "clearly intended to cause significant harm".
The attack was claimed by the Islamic State terror group.
"The bombing on a metro in London was carried out by a detachment of the Islamic State," the group said in a statement published by its Amaq propaganda agency.
Twelve hours after the blast at Parsons Green station in southwest London, Prime Minister May announced the national threat level would be raised to ''critical'', meaning another attack may be imminent.
She said military personnel would take over guard duty at certain closed ''protected sites'', freeing up 1,000 police officers to be deployed on the transport network and on streets across Britain.
The country was last on critical alert after the bombing at a concert in Manchester in May, which was also claimed by the IS group.
The explosion, on a District Line Tube occurred as the train pulled into Parsons Green station. Commuters said they heard a bang and saw a fireball inside the carriage when the "bucket bomb" exploded.
Several people suffered facial burns, and some reportedly were even trampled in the rush to escape. But none of the injuries were life-threatening.
Pictures of a white bucket on fire inside a supermarket bag, with wires trailing on to the carriage floor of the train went viral on social media.
Investigators were examining what appears to be a circuit board recovered from the scene, news reports said.
Scotland Yard said it was a terror incident and they "assess" an IED triggered the blast. A hunt was on for a suspect the British media labelled as the "bucket bomber".
Some reports indicated that the suspect was identified after investigators reviewed the CCTV footage at the station.
This is the fifth terrorism incident in the UK this year, and the only one in which nobody has died. The previous four saw 36 people killed.
The London Ambulance Service said 29 people have been treated in hospital. Police said that most had flash burns.
Assistant Commissioner Mark Rowley said more police would be deployed in London, particularly on the transport network, but refused to say whether anyone had been arrested.
Prime Minister May said the incident was a "cowardly" act "clearly intended to cause significant harm".
Addressing the media after chairing an emergency response COBRA committee meeting at Downing Street, May said the UKs terror threat level remains unchanged for now, at "severe" - the second highest.
"That means that a terrorist attack is highly likely. But this will be kept under review as the investigation progresses. The public should go about their daily lives but remain vigilant," she said.
"We do need to ensure that we are dealing with, not just the terrorist threat but with the extremism and the hate that can actually incite that terrorism." the prime minister added.
'Sick and demented': Trump
United States President Donald Trump Tweeted, ''Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!''
The police later in an updated statement said an area of 50 metres in radius around the station has been evacuated as a precaution in case the bomb left on the train remains unstable.
Mayor Sadiq Khan said London "utterly condemns the hideous individuals who attempt to use terror to harm us and destroy our way of life", and urged Londoners to remain calm and vigilant.
Scotland Yard's counter-terrorism squad, SO15, has taken the lead in the investigation from the transport police.
"Deputy Assistant Commissioner Neil Basu, the senior national coordinator for counter-terrorism policing, has declared it a terrorist incident," the police said in a statement earlier in the day.
"The Metropolitan Police Service and British Transport Police attended the scene, along with colleagues from the London Fire Brigade and London Ambulance Service. At present we are aware of a number of people who have suffered injuries," it said, adding that the station remains cordoned off and "we are advising people to avoid the area."
Downing Street said May was "receiving regular updates".
"My thoughts are with those injured at Parsons Green and emergency services who are responding bravely to this terrorist incident," May had tweeted soon after the incident.
Eyewitnesses outside the station reported seeing people with facial injuries. Many have been told to stay in lockdown as police evacuated the area and placed a wide zone under a police cordon.
Passenger Chris Wildish told the BBC that he saw a bucket in a supermarket bag with "low-level flames coming out of it" by the door of the rear carriage.