A total of 12 people are being held by police after early morning raids on flats in Barking, in connection with last night's attack on London Bridge.
Eight more people have been arrested at different across the town.
The flat was home to one of the people suspected to have taken part in the stabbing rampage, sources told Sky News, but the Metropolitan Police did not immediately comment.
A woman was also arrested during the raid but later released, according to the broadcaster.
Later, four women were driven away in a police van but it was unknown if they had been arrested or simply moved.
Residents reported hearing loud bangs and said they were later told by police they were controlled explosions.
Neighbour Ali Nabi told The Daily Telegraph: "I heard the police shouting 'get down, get down', I looked out of my window and they were laid on the floor. All Asian men in black religious robes.
"One was in his 50s, another had a white beard, the third was in his 30s and the fourth was younger. They were all laid down with their hands cuffed behind their backs.
"I think it was someone on the ground floor but I've never seen them."
TV footage showed an ambulance outside the property.
At least seven people were killed after the attack and dozens more were hurt.
Police shot dead the three attackers and have launched an investigation.
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