John Grieve, commander of the anti-terrorist squad, said early-morning raids on addresses in south London recovered bomb-making equipment, maps and false identities for the bombers who intended to strike at the capital's power supplies. He described the raids as "a significant success against Irish Republican Army terrorism".
He added: "I believe that we were only a few hours away from grave loss of life and serious disruption to the ways of life of the capital and the South-east."
The squad was backed by armed police and special branch for the operation which began at 2.30am when CS pellets were fired into a house in Tooting to disable those inside.
Neighbours reported the sound of gunfire but police said this was from the CS canisters. Three of those arrested are believed to have undergone hospital checks but no firearms were used. Seven men, some from Northern Ireland, were taken from addresses in Tooting and Peckham and were being held last night under the Prevention of Terrorism Act.
Police recovered 36 bomb timers at one of the addresses and Mr Grieve said: "It suggests that there were to be a whole series of attacks over quite a period of time." No explosives were found but police were continuing a search of both addresses last night and concrete-breaking equipment was brought into an address in Peckham to dig in the cellar. Two other addresses, one in Wandsworth and another in Southfields, both south-west London, were also visited but no arrests were made.
Yesterday's raids uncovered the second bomb factory located by police on the British mainland since the IRA cease-fire ended with the Docklands bombing in February.
The first cache was discovered when detectives found 15kg of Semtex explosive and other bomb-making equipment at a house in Lewisham, south London, after Edward O'Brien, 21, blew himself up on his way to plant a bomb in central London shortly after the Docklands attack.
A pounds 1m reward was offered for information leading to the conviction of those responsible and another pounds 1m reward is on offer for information on the Manchester bombing.
Commander Grieve appealed for information from people in the motor trade, particularly those dealing in cash. "We only get to where we get to with the help of the people of London and everyone else in the UK because it's the communities that defeat terrorism and the information they contact us with is what helps us win," he said. Police believe they have found the getaway car for the Manchester bombing. A red Ford Granada, sold three months ago in London to a man with an Irish accent, was found in Preston, Lancashire.Reuse content