The man suspected of carrying out the Finsbury Park mosque attack has been named locally as 47-year-old Darren Osborne.
The father-of-four from Cardiff was arrested for attempted murder at the scene and taken to a south London police station where he remains in custody.
A statement from the Metropolitan Police said he was subsequently arrested for a second time on suspicion of terrorism offences.
Mr Osborne is reported to have been living in Weston-super-Mare with his partner and children
The attacker, who is believed to have acted alone, struck as the area was busy with worshippers attending Ramadan night prayers in north London.
Nine people were taken to hospital, with one since discharged, while two others were treated at the scene after the attack early on Monday morning.
All of the casualties were Muslims.
Earlier, the Met said it was carrying out searches at a residential address in the Cardiff area.
Police are at a property in Pentwyn, where Mr Osborne is listed as living, in connection with the attack.
Residents said they were "shocked" after seeing photographs of their neighbour being arrested in London.
Saleem Naema, 50, and his young son said the man pictured was their neighbour.
"I can't believe it," Mr Naema, a taxi driver, said.
"I know him. I've lived here for five years, he was already living here when I moved in.
"If I ever needed anything he would come. I am a Muslim."
Khadijeh Sherizi, who said she lives next door to Mr Osborne, said: "I saw him on the news and I thought 'oh my God' that is my neighbour.
"He has been so normal. He was in his kitchen yesterday afternoon singing with his kids.
"He was the dad of the family. He has kids. He lives next door. He seemed polite and pleasant to me."
Deputy Assistant Commissioner Neil Basu said: "Our thoughts are with all those affected by the incident at Seven Sisters Road and their families, friends and communities.
"This is being treated as a terrorist incident and is being investigated by the Counter Terrorism Command. The investigation is ongoing and we are working fast to know the full details of how and why this took place.
"All the victims were from the Muslim community and we will be deploying extra police patrols to reassure the public, especially those observing Ramadan.
"We are working hard to protect all communities and the public will see additional officers patrolling across the city and at Muslim places of worship.
"This was an attack on London and all Londoners. We should all stand together against extremists whatever their cause."
Additional reporting PA