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Two people at the scene were treated for injuries after the vehicle crashed into the large steel barriers erected around the Houses of Parliament complex.
In a terror attack, a man drove a car at high speed and ploughed into several pedestrians and cyclists before crashing into security barriers outside the United Kingdom's Parliament during rush hour on Tuesday, injuring three persons, Scotland Yard said.
The attack, the second terrorism incident on the iconic building in central London since March last year, is being investigated by Scotland Yard's Counter-Terrorism Command.
The man, in his late 20s, has been arrested on suspicion of terrorism offences.
Metropolitan Police Assistant Commissioner Neil Basu, the National Lead for Counter Terrorism Policing in the UK, said the man was not cooperating with police as they work to establish his identity.
"Our priority is to formally establish the identity of the suspect and his motivation if we can. He is not currently cooperating," the Indian-origin officer said, adding that the suspect was not known to security services or under surveillance.
"There is no intelligence at this time of further danger to Londoners or to the rest of the UK connected to this incident.
"Given that this appears to be a deliberate attack, the method and this being an iconic site, we are treating it as a terrorist incident," he said.
"We are treating the scene and Parliament Square as a crime scene. Cordons are likely to be in place for some time as the investigation team continues to carry out its important work to establish what happened," Basu said.
A meeting of the UK government's Cobra emergency committee was also convened in the wake of the attack.
The suspect, who has not been formally identified, is being held at a south London police station.
BBC reported that the man is from the Birmingham area.
A Met police spokesperson said that there was nobody else in the vehicle, which remains at the scene and is being searched.
No weapons have been recovered at this stage.
Police have put up a Terrorism Act cordon, a reaction to incidents of this nature near any high-security hotspots in the city.
"At 0737 hrs (1207 IST) today, a car was in collision with barriers outside the Houses of Parliament," the Met Police said.
The car was seen wedged into flap-style barriers that allows vehicles access to the House of Lords, giving the impression that the driver may have been trying to gain access to the Parliament building.
Prime Minister Theresa May said: ‘My thoughts are with those injured in the incident in Westminster and my thanks to the emergency services for their immediate and courageous response.’
Home Secretary Sajid Javid also thanked emergency services for their quick response.
Mayor of London Sadiq Khan said he was in close contact with police.
London Ambulance Service said in a statement that two people were taken to hospital and one man has since been discharged while a woman remains in hospital being treated for ‘serious but non-life-threatening injuries’.
Another man was also treated at the scene but did not require hospital treatment. The area around Parliament Square has been cordoned off as investigations continue.
The incident occurred at peak rush hour, resulting in major travel disruptions as Westminster tube station was shut down and road closures put in place.
Streets around Millbank, Parliament Square and Victoria Tower Gardens have been cordoned off. Heavy armed police presence could be seen in the area as the incident unfolded.
Barry Williams, a BBC member of staff, said: "I heard lots of screams and turned round.”
"The car went onto the wrong side of the road to where cyclists were waiting at lights and ploughed into them. Then it swerved back across the road and accelerated as fast as possible and hit the barrier at full pelt.
"It was a small silver car and he hit it at such speed the car actually lifted off the ground and bounced," Williams said.
Some eyewitnesses reported seeing smoke emanating from the hood of the car. The Houses of Parliament are surrounded with security barriers of steel and concrete.
Parliament is currently not sitting. The ongoing parliamentary recess period meant there would have been no Members of Parliament (MPs) or peers in the Houses of Parliament or on their way into the building.
However, hundreds of workers and officials would have been within the complex, including construction crew involved in refurbishment work on the Palace of Westminster, which houses the iconic Big Ben.
British Transport Police said it was increasing patrols in England, Scotland and Wales and that its officers would be ‘highly visible on trains and at stations’.
Britain's terror threat level remains at ‘severe’, which means an attack is highly likely, since a series of terrorist attacks last year.
The UK has been on high alert since the March 2017 attack in which Khalid Masood drove into pedestrians on Westminster Bridge, killing five, before going on a stabbing spree at the gates of Parliament.
It was followed by a suicide bombing at an Ariana Grande concert in Manchester in May, which claimed 23 lives.
In June last year, a group of three Islamic State-inspired men rammed a vehicle into pedestrians in London Bridge area before going on a stabbing frenzy, killing eight people before being shot by armed officers.