Armed police from Savile Row and Vine Street stations surrounded the Regent Street jewellers at 10.45am after security guards, who were ambushed and tied up by three robbers armed with a pistol, escaped and raised the alarm. But according to onlookers, the two guards, who were wearing civilian clothes, were then mistaken for the crooks by police arriving on the scene.
Daniel Filipovic, 21, who had been walking to work when he was approached by a guard who told him to alert the police, said: "By the time I got through the police had arrived and arrested him."
Michael Bay, who works at a clothing shop opposite, said. "I saw a man in his forties come out with his hands up. He hit the deck straight away. He was led away by police. Officers with machine guns, Sten guns and handguns were sprawled across the road."
More than 70 police surrounded the building, hiding in doorways and behind cars, waiting for the robbers to emerge. Buses and cars were abandoned in the middle of Regent Street as the heart of the West End of London was sealed off.
The siege caused chaos to traffic already swollen by crowds trying to reach nearby Soho for the Chinese New Year celebrations. After four hours there was no end in sight. Shops in Regent Street were thought to have lost thousands of pounds in business.
After six hours, when there had still been no sign of movement, police searched the building, which turned out to be empty.
Staff and members of the Flying Squad conducted a stock check and it was discovered that £250,000 worth of jewels were missing. It appears that the robbers had fled when the police initially arrived, mingling with crowds.
At a press conference outside the store, Detective Chief Inspector Colin Harry said: "We are dealing with highly professional, knowledgeable and determined criminals."
Asked why it had taken police six hours to discover that the robbers had fled, he replied: "We genuinely believed that they were on the premises at the time, so we conducted a search. The search was done the way it had to be."